Stocks close higher after upbeat retail sales, strong Citi earnings


U.S. stocks rallied on Friday to snap a four-day losing streak on Wall Street. Sentiment was boosted by better-than-expected retail sales data and surprising earnings from Citigroup (C).

The S&P 500 rose 1.9%, while the Dow Jones Industrial Average added 657 points, or roughly 2.2%. The technical Nasdaq climbed 1.8%.

Citi’s missed second-quarter results lifted shares of the banking industry to post the sector’s best intraday gain since May, according to Bloomberg data. The mega bank reported an 11% jump in revenue in the period to $19.64 billion, a day after traders considered a series of disappointing financials from JPMorgan ( JPM ) and Morgan Stanley ( MS ). Citi shares rose 13%. Wells Fargo ( WFC ) and Bank of America ( BAC ) gained 6% and 7%, respectively.

“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels,” Citigroup CEO Jane Fraser said in a statement on make money.

In other news Thursday, JPMorgan chief Jamie Dimon warned in post-earnings remarks that risks to the U.S. economy appear “closer than they have been before” and said “unprecedented quantitative tightening” is expected to have negative effects, just one a day after another red-hot inflation report fueled speculation among strategists that the Federal Reserve could go as far as to raise rates by a full percentage point later this month.

Federal Reserve Board of Governors member Christopher Waller said Thursday that he would be prepared to support a 100 basis point hike if upcoming economic data points to strong consumer spending.

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

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

“Simply put, there is a range of potential outcomes from a soft landing to a hard landing, driven by rising interest rates, the effectiveness of quantitative easing and flawed, volatile markets,” Dimon said in a call with Wall Street analysts on Thursday.

Retail sales rose more than expected in June, pointing to continued strength in US consumers even in the face of decades-high inflation and worries about a slowing economy, Commerce Department data showed on Friday. The broadest measure of retail purchases rose 1% in June from the previous month, while May’s figure was revised downward to show a 0.1% drop in sales – the first decline this year. Economists polled by Bloomberg had expected retail sales to rise 0.9% last month.

In other economic news, consumer sentiment rose slightly in July to 51.1, according to the latest University of Michigan survey. According to Bloomberg consensus data, the figure was estimated at 50. The closely watched report on inflation expectations softened significantly, 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 largest shareholder in the company as it struggles with declining users.

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

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