Stocks close higher on upbeat retail sales and strong Citi earnings

Stocks close higher on upbeat retail sales and strong Citi earnings

US stocks rallied on Friday to cap a four-day losing streak on Wall Street. Sentiment was supported by better than expected retail sales data and a surprise earnings overshoot from Citigroup (C).

The S&P 500 jumped 1.9%, while the Dow Jones Industrial Average added 657 points, or about 2.2%. The tech-heavy Nasdaq climbed 1.8%.

Citi’s explosive second-quarter results lifted shares of banking peers to post the sector’s best intraday rally since May, according to Bloomberg data. The mega-bank announced an 11% increase in revenue for the period to $19.64 billion, a day after traders reflected on a series of disappointing financial data from JPMorgan (JPM) and Morgan Stanley (MS) . Citi shares closed up 13%. Wells Fargo (WFC) and Bank of America (BAC) gained 6% and 7% respectively.

“In a challenging macroeconomic and geopolitical environment, our team delivered strong results and we are well positioned to weather uncertain times given our liquidity, credit quality and reserve levels,” said Jane. Fraser, chief executive of Citigroup, in the income statement.

Meanwhile, on Thursday, JPMorgan boss Jamie Dimon warned in post-earnings remarks that risks to the US economy appear “closer than they have been before” and said a ” quantitative tightening never seen before” is expected to have negative consequences, just a day after another scorching inflation report spurred speculation among strategists that the Federal Reserve could go so far as to hike rates by a full percentage point full later this month.

Christopher Waller, a member of the Federal Reserve Board of Governors, said Thursday that he would be prepared to support a 100 basis point increase if the next economic releases point to strong consumer spending.

NEW YORK, NEW YORK – JULY 12: People walk to the New York Stock Exchange on July 12, 2022 in New York City. Wall Street is down again amid the recession, the S&P 500 closed down 1.2% while tech stocks took the Nasdaq down 2.3%. (Photo by John Smith/VIEWpress)

“I’m just saying there is a range of potential outcomes from a soft landing to a hard landing, depending on how interest rates rise, the effectiveness of quantitative tightening, and faulty and volatile markets.” , Dimon said in a call with Wall Street analysts on Thursday.

Retail sales rose more than expected in June, indicating continued strength from U.S. consumers even in the face of decades-high inflation and worries about an economic slowdown, Commerce Department data showed Friday. The broadest measure of retail purchases rose 1% in June from the previous month, while the May figure was revised down to show a 0.1% drop in sales – the first drop this year. Economists polled by Bloomberg had expected retail sales to rise 0.9% last month.

Elsewhere in the economic releases, consumer sentiment rose slightly in July to 51.1, according to the latest survey from the University of Michigan. Estimates called for the figure to be 50, according to Bloomberg consensus data. The report’s closely watched inflation expectations data moderated considerably, with long-term inflation expectations falling to 2.8% from 3.1% at the end of June.

Shares of Pinterest (PINS) rose 16% after the Wall Street Journal reported that activist investment firm Elliott Management had taken a 9% stake in the social media platform, becoming the biggest part of the business as it struggled with declining user numbers.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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