Economic Data Lift Wall Street, But Banks Drag

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The markets got a lift from a round of strong economic data from the U.S., China and Europe, but Citigroup's weak quarterly earnings report pressured the banking sector, restraining the gains on the day.

Today's Markets

The Dow Jones Industrial Average rose 60 points, or 0.48%, to 12482, the S&P 500 jumped 4.6 points, or 0.36%, to 1294 and the Nasdaq Composite gained 17.4 points, or 0.64%, to 2728.

The Dow closed at its highest level since July on the day, while the Nasdaq had its best close since October. Both markets have rallied this year, with the Dow jumping 2.2% and the Nasdaq leaping 4.7% in less than a month.

Energy and healthcare stocks performed the best on the day. Indeed, Merck (NYSE:MRK), the pharmaceutical giant, was a top Dow component. Pioneer Natural Resources (NYSE:PXD), an oil and gasoline exploration company, was among the best-performing S&P 500 components.

The Nasdaq got a lift from strength across several technology companies, including Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN).

Also on the corporate front, Citigroup (NYSE:C) missed Wall Street's expectations on the top and bottom lines. The banking giant said it earned 38 cents per share, less than the 43 cents in earned in the same period in 2010, and weaker than the 49 cents analysts had been expecting. Sales came in at $17.2 billion, also shy of estimates of $18.5 billion.

Citigroup's weak quarterly performance weighed heavily on other big financial names. JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) were all in the red.

Wells Fargo (NYSE:WFC), on the contrary, reported profit and revenue that came in ahead of estimates. The bank earned 73 cents a share on $20.6 billion in revenue. Analysts projected the company to earn 72 cents on $20.1 billion.

Strong Economic Data Boost Sentiment

Market participants were greeted on Tuesday with reports suggesting three major global economies may be faring better than many economists expected.

Manufacturing in the New York region expanded more quickly than expected in January. The New York Federal Reserve's gauge of manufacturing rose to 13.5 in January from 8.2 in December, topping forecasts of a reading of 11. The more closely-tracked report from the Philadelphia Fed is on tap for Thursday.

China's economy expanded at a pace of 8.9% in the fourth quarter over the year prior, topping forecasts of 8.7%. Still, the world's second-biggest economy only grew at 2% from a quarter earlier in the latest sign the rate of growth is slowing down at a rapid pace. The data, however, suggest that China's economy is slowing down more gradually than some had feared, potentially tempering its shock to the global economy.

Analyst and investor sentiment in Germany also soared by the widest margin on record in January, according to the Zew think tank, which began reporting its estimates in 1991. This report was taken by markets as a positive sign, showing sentiment is brightening in Europe's biggest economy despite the economic and debt malaise hitting Europe.

Also setting a positive tone were data showing inflation in Great Britain cooled down significantly in December from November. Falling inflation comes as "good news in that it allows central banks to be more accommodative in the future," said Louise Cooper, a senior financial analyst at BGC Capital in an interview with FOX Business.

Commodities Rally

Commodities markets were sharply higher, helped by a weaker dollar and relatively upbeat economic news from China.

The benchmark crude oil contract traded in New York jumped $2.04, or 2%, to $100.71 a barrel. Wholesale RBOB gasoline soared 1.4% to $2.771 a gallon.

In metals, gold climbed $24.80, or 1.5%, to $1,655 a troy ounce. The precious metal settled at its highest value since December 13.

Foreign Markets 

European blue chips jumped 1.5%, the English FTSE 100 rose 0.65% to 5,694 and the German DAX tacked on 1.8% to 6,333.

In Asia, the Japanese Nikkei 225 rallied 1.1% to 8,466 and the Chinese Hang Seng surged 3.2% to 19,628.