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Tags: Stocks | Earnings | Citigroup | Netflix

Stocks Rise on Earnings Optimism as Citigroup, Netflix Jump

Monday, 14 July 2014 04:06 PM EDT

Stocks advanced Monday, with the Standard & Poor’s 500 Index rebounding from the biggest weekly loss in three months, as Citigroup Inc. rallied on better-than-forecast earnings and Internet shares rebounded.

Citigroup climbed 3 percent, leading financial shares higher as trading revenue topped estimates. Facebook Inc. and Netflix Inc. paced gains in Internet stocks. Apple Inc. rose 1.3 percent after Barclays Plc advised investors to buy shares in the world’s biggest company by market value.

The S&P 500 added 0.5 percent to 1,977.10 at 4 p.m. in New York.

“The earnings report out of Citigroup helped to lift the market,” Robert Pavlik, who helps oversee $4.5 billion as chief market strategist at Banyan Partners LLC in New York, said in a phone interview. “The market has more room to run. It’s going to be interesting to watch the amount of strength that it carries day to day.”

Goldman Sachs Group Inc. raised its S&P 500 forecast for 2014 Monday to 2,050 from 1,900. Rising earnings and faster economic growth will push equities higher and stocks are still attractive relative to bonds, according to a research report from David Kostin, chief equity U.S. strategist at the bank.

Record Levels

The S&P 500 slid 0.9 percent last week amid signs of financial stress at a Portuguese bank and speculation that the recent rally is overdone. The benchmark gauge closed at an all- time high and the Dow topped 17,000 for the first time on July 3. The S&P 500 hasn’t had a drop of 10 percent in more than two years and the gauge trades at a valuation of 18 times reported earnings, the highest since 2010.

JPMorgan Chase & Co., Goldman Sachs, Yahoo! Inc. and Intel Corp. are among the 58 companies on the S&P 500 posting earnings this week. Profit by the gauge’s members increased 4.5 percent in the second quarter, and revenue rose 3.1 percent, according to estimates compiled by Bloomberg.

Citigroup jumped 3 percent to $48.42. Better-than-estimated trading revenue and lower credit costs helped second-quarter profit beat analysts’ forecasts.

The third-largest U.S. bank by assets also agreed to pay $7 billion in fines and consumer relief to resolve government claims that it misled investors about the quality of mortgage- backed bonds sold before the 2008 financial crisis.

Banks Rally

Bank of America Corp. added 1.2 percent, JPMorgan Chase climbed 0.9 percent and Goldman Sachs increased 1.3 percent.

“Earnings generally are coming in pretty positively here and revenues are as well,” said Timothy Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, in a phone interview. “It’s a very early stage in this earning’s season to declare victory, but the indications look good here.”

Investors will also be watching statements from central banks and economic reports this week for clues to the strength of the global economy.

Federal Reserve Chair Janet Yellen is due to testify to U.S. lawmakers. Yellen will deliver her semi-annual monetary policy testimony to the Senate Banking Committee tomorrow and to the House Committee on Financial Services the following day.

Fed Stimulus

Minutes of the Fed’s June meeting released last week showed officials have agreed they’ll end their asset-purchase program in October if the economy holds up. At the same time, the policy makers said the central bank should continue to support favorable financial conditions needed to sustain growth, according to the minutes.

Three rounds of Fed bond-buying have helped propel the S&P 500 higher by more than 190 percent during the current five-year bull market.

Among economic reports this week, investors will receive data on housing, manufacturing, labor and inflation. The S&P 500 has rallied 7 percent this year amid signs the U.S. economy is recovering from a 2.9 percent contraction in the first quarter.

© Copyright 2023 Bloomberg News. All rights reserved.

U.S. stocks advanced Monday, with the Standard & Poor's 500 Index rebounding from the biggest weekly loss in three months, as Citigroup Inc. rallied on better-than-forecast earnings and Internet shares rebounded.
Stocks, Earnings, Citigroup, Netflix
Monday, 14 July 2014 04:06 PM
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