By Dow Jones Business News,
July 14, 2014, 03:26:00 PM EDT
By Dan Strumpf
Stocks rose broadly, helped by financial shares, while the Dow industrials pushed back into record-high territory.
The Dow Jones Industrial Average posted a fresh intraday record of 17088.43, recently rising 124 points, or 0.7%,
to 17068. The S&P 500 index tacked on 10 points, or 0.5%, to 1978. The Nasdaq Composite Index added 30 points, or 0.7%,
Financial stocks climbed, with shares of Citigroup rising 3.1% after the bank said it agreed to pay $7 billion to
settle allegations by the U.S. government about the quality of mortgages it sold leading up to the financial crisis.
The bank also reported that its second-quarter profit tumbled 96% due to a charge related to the settlement.
Stripping out the charge, the results topped Wall Street estimates.
The gains come on the heels of steep losses last week amid jitters over the financial health of a Portuguese bank.
The S&P 500 and Nasdaq Composite dropped by the most since April, while the Dow posted its biggest weekly loss in a
month. But investors largely shook off those worries Monday.
"The Citigroup earnings were enough of a tailwind to push the boat forward," said Michael Antonelli, equity sales
trader at brokerage Robert W. Baird. He said he has noticed some large investors buying into last week's selloff.
Monday's gains in financial shares mark an improvement for the sector, which has been a laggard this year. Big
banks have been hit by a downturn in once-lucrative trading businesses and litigation costs, while the sector broadly
has been hobbled by a weak mortgage market. The financial sector index is up 4.4% year to date, trailing the 7% gain in
the broader S&P 500.
Financial company fortunes aren't expected to improve soon. Although a pickup in corporate mergers is helping many
banks, "stronger investment banking activity is likely to be offset by continued weakness in trading operations," said
Jonathan Golub, chief U.S. market strategist at RBC Capital Markets.
Analysts expect second-quarter earnings in the sector to decline 4.2%, according to FactSet, on top of a 2.6% drop
in earnings in the first three months of the year. Second-quarter earnings for the broader S&P 500 are expected to rise
Second-quarter earnings are expected to take center stage this week, when more than 50 companies in the S&P 500 are
scheduled to report.
Many investors remain optimistic on the outlook for stocks broadly, amid improving U.S. economic data, improving
earnings and accommodative Federal Reserve policy. U.S. stocks have steadily pushed to records through the year.
"We go through these short periods where the market sells off and there's a little bit of a rotation...and then you
get a pullback and the market comes rallying back," said Andrew Slimmon, managing director at Morgan Stanley Wealth
Mr. Slimmon said his firm has been picking up shares of companies expected to show strong earnings growth, though
he is increasingly cautious about avoiding shares with expensive price tags. Investors looking for bargain stocks would
be better served shopping outside the U.S., he said. "There's bigger values elsewhere."
No major economic data were due Monday. Later this week, investors are likely to focus on reports on June retail
sales and readings on manufacturing and housing. Federal Reserve Chairwoman Janet Yellen is due to give semiannual
testimony to Congress on Tuesday and Wednesday.
European stocks were recovering following last week's turbulence. The Stoxx Europe 600 index rose 0.9%, clawing
back part of last week's losses.
The dollar eased against the euro but gained on the yen.
In commodity markets, gold futures tumbled 2.3% to $1,305.70 an ounce, while crude-oil futures declined 0.1% to $
100.74 a barrel.
In other corporate news, U.S. drug company AbbVie Inc. is nearing a deal to buy Dublin-based Shire PLC for more
than 31 billion pounds ($53 billion). Shire said Monday it had received an altered offer of 53.20 pounds a share,
marking the fifth takeover attempt by AbbVie.
Shares of AbbVie fell 0.2%. U.S.-based shares of Shire rose 2.5%.
Shares of Riverbed Technology fell 6.8% after the information-technology company lowered its second-quarter revenue
outlook, as sales fell short of company targets.
Write to Dan Strumpf at email@example.com
(END) Dow Jones Newswires
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