Stocks kicked off the week with a bang today on the strength of Citigroup's (C 1.25%) earnings this morning and a strong March retail sales report. By the end of the session, the Dow Jones Industrial Average (^DJI 0.42%) was up 146 points, or 0.9%, while the S&P 500 gained 0.8%.
Before markets opened today, the Commerce Department reported a 1.1% improvement in retail sales last month, its highest mark in a year and a half and better than expectations of 1% and February's clip of 0.7%, which was revised up from 0.3%. The report helped eased earlier concerns about poor winter weather affecting consumer spending. Year over year, the figure improved 3.8%, a solid sign for the improving economy, but over the three-month period from January to March, that growth was only 2.5%, because of poor winter weather.
Citigroup shares also gave the market a jolt, as its shares jumped 4.3% on a strong earnings report. Adjusted earnings per share at the banking giant ticked up from $1.29 to $1.30, beating estimates at $1.14. Revenue, meanwhile, dropped 2% to $20.12 billion, but that was also better than expectations at $19.37 billion. Losses in troubled assets improved, but revenue fell in several major categories including investment banking, mortgage lending, and bond trading. Citigroup is also still reeling from the Federal Reserve's rejection of its plan to return capital to shareholders last month. CEO Michael Corbat told investors, "We are committed to bringing our capital planning process to the highest possible standards." The bank has not yet received a formal letter from the Fed about the issues with its capital plans, but believes it has to do with the way it measures risks in stress scenarios.
Also moving higher today was Bebe Stores, Inc. (BEBE 16.07%), which finished up 15% after an upgrade from Janney Capital Markets. The research firm said that the women's apparel retailer could see positive same-store sales come back this year, and positive free cash flow and net income in the next two years. Janney lifted its rating on Bebe to a buy from "neutral," and raised its price target to $7.50 from $5.50. Bebe has struggled lately with comps falling 1.9% in its most recent quarter so the endorsement from Janney was a surprise dose of good news. Still, Bebe competes in a tough and fickle women's fashion industry, and Wall Street sees losses through next year. I'd like to see better results before getting behind the stock. Analysts are expecting a loss of $0.15 a share in its next report, which should come out by the beginning of May.
