US stocks rallied on Friday to end a four-day losing streak on Wall Street. Sentiment was buoyed by better-than-expected retail sales data and a surprise earnings hit at Citigroup ( C ).
The S&P 500 rose 1.9%, while the Dow Jones Industrial Average added 657 points, or about 2.2%. The Nasdaq, very technological, rose 1.8%.
Citi’s second-quarter results boosted shares of banking peers to record the sector’s best intraday rally since May, according to data from Bloomberg. The megabank reported a Revenue rose 11% during the period to $19.64 billion, a day after traders reflected on a disappointing set of financial results 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 macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our levels of liquidity, credit quality and reserves,” said Jane Fraser, chief executive of Citigroup, in the earnings statement.
Meanwhile, on Thursday, JPMorgan chief Jamie Dimon warned in post-earnings remarks that risks to the U.S. economy appear “closer than they were before” and said he expects “a “unprecedented quantitative tightening” has negative consequences, just one day later. Another red-hot inflation report spurred speculation among strategists that the Federal Reserve could raise rates by a full percentage point later this month.
Christopher Waller, member of the Board of Governors of the Federal Reserve said on Thursday that he would be open to supporting a 100 basis point hike if the next economic publications point 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. Wall Street has fallen again amid the recession, with the S&P 500 closing down 1.2%, while tech stocks pushed the Nasdaq down 2.3%. (Photo by John Smith/VIEWpress)
“I’m simply saying that there is a range of potential outcomes, from a soft landing to a hard landing, driven by how much interest rates rise, the effectiveness of quantitative tightening, and flawed and volatile markets,” he said. Dimon said on a call with Wall Street analysts on Thursday.
The story continues
Retail sales rose more than expected in June, pointing to continued strength for US consumers, even in the face of decades-high inflation and worries about an economic slowdown, data showed on Friday of the Department of Commerce. The broader measure of retail shopping rose 1% in June from the previous month, while May’s figure was revised down to show a 0.1% drop in sales, the first drop since ‘this year. Economists polled by Bloomberg had expected retail sales to rise 0.9% last month.
Elsewhere in economic publications, consumer sentiment rose slightly in July to a reading of 51.1, according to the latest University of Michigan survey. Estimates had called for the number to reach 50, according to Bloomberg consensus data. The closely watched inflation expectations data from the report moderated markedly, with long-term inflation expectations falling to 2.8% from 3.1% at the end of June.
Shares of Pinterest ( PINS ) rose 16% afterward The Wall Street Journal reported Activist investment firm Elliott Management took a 9% stake in the social media platform, becoming the company’s largest stakeholder amid declining users.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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