Wall Street rallies on Citigroup's earnings, retail sales

Stocks climbed on Monday, rebounding from last week's losses after Citigroup's earnings and retail sales sharply exceeded expectations.

Citigroup Inc shares shot up 5.5 percent to $36.66 and gave the biggest lift to the S&P 500 after the third-largest U.S. bank reported quarterly adjusted earnings that surged from the year-ago quarter and beat expectations. The growth came as mortgage lending increased and capital markets results rebounded.

Results from Goldman Sachs are expected Tuesday. The stock gained 3.6 percent to $124.50 on Monday, while the S&P financial index rose 1.2 percent.

Worries about third-quarter U.S. earnings have put a damper on stocks in recent weeks, with the S&P 500 falling 2.2 percent last week - its worst weekly performance in four months. But the S&P 500 is still up 14.5 percent for the year.

"It's a quiet rally after a little bit of a pullback," said Eric Kuby, chief investment officer at North Star Investment Management Corp. in Chicago.

"There is this continued sense that most money managers are trailing the index. You're not going to catch up if you're sitting in cash, so there continues to be pressure."

The three major U.S. stock indexes also drew support from optimism about retail data, which showed September retail sales rose 1.1 percent - above the 0.8 percent growth that had been anticipated.

Investors remained cautious about Europe, waiting for signs that Spain was ready to formally request a bailout, which is seen as necessary to deal with its debt crisis.

The Dow Jones industrial average rose 95.38 points, or 0.72 percent, to 13,424.23 at the close. The Standard & Poor's 500 Index gained 11.54 points, or 0.81 percent, to finish at 1,440.13. The Nasdaq Composite Index advanced 20.07 points, or 0.66 percent, to close at 3,064.18.

Both the Dow and the S&P 500 kept above technical support levels at their 50-day moving averages. Last week's declines had left each index on the precipice of breaking below those levels.

"The market's reasonably priced, and while it's had a good move this year, I think most people have not participated so there might be an opportunity for a bit of a tailwind," said Mark Foster, chief investment officer at Kirr Marbach & Co in Columbus, Indiana.

Shares of Intel , the world's leading chipmaker, gained 1.2 percent to $21.73 a day ahead of its earnings report. Analysts are expected to watch Intel's gross margin figures, which have been declining in the past couple of years. [ID:nL1E8LE2DE] Intel's advance on Monday helped drive the PHLX semiconductor index up 1.5 percent.

Drugmaker shares advanced, led by Eli Lilly and Co , up 4.1 percent at $52.53, and Abbott Laboratories , up 4 percent at $72.05. The S&P healthcare index climbed 1.4 percent.

Eli Lilly shares rose after the drugmaker said a late-stage study of its experimental gastric cancer drug met its main goal of improving overall survival. Abbott's stock gained after results from a mid-stage study of hepatitis C medicines.

Lending further support was a rebound in energy shares as U.S. crude curbed an earlier slide that had pushed the price down below $90 a barrel. The S&P energy index gained 0.5 percent. Brent crude rose $1.18, or 1.03 percent, to settle at $115.80 a barrel.

Profits of S&P 500 companies are seen dropping 2.3 percent this quarter from a year ago, according to Thomson Reuters data.

With about 8 percent of S&P 500 companies having reported, 58 percent of companies have topped profit expectations - less than the average beat rate of 67 percent for the past four quarters, Thomson Reuters data showed.

In other economic data, a survey showed that an index of manufacturing activity in New York state shrank for the third month in a row in October.

Volume was roughly 5.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.52 billion.

Advancers outnumbered decliners on the NYSE by a ratio of 2 to 1. On the Nasdaq, more than five stocks rose for every three that fell.

(Additional reporting by Atossa Abrahamian; Editing by Jan Paschal)