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Originally published Tuesday, October 16, 2012 at 8:01 PM

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Retail sales, Citigroup give financial markets a boost

The Commerce Department said Monday that retail sales climbed 1.1 percent in September after a revised 1.2 percent increase in August that was the biggest since October 2010 and larger than previously reported.

Bloomberg News

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NEW YORK — U.S. stocks rose Monday, as the Standard & Poor’s 500 Index rebounded from its biggest weekly drop in four months, after American retail sales and Citigroup’s earnings topped estimates.

Citigroup soared 5.5 percent, the most since March, as results were helped by a surge in bond-trading revenue.

Texas Instruments rose 3.5 percent Monday on a report that Seattle-based Amazon.com may buy its mobile-chip unit.

PulteGroup and KB Home jumped more than 4.9 percent as homebuilders rallied.

“The retail-sales report looked a little bit better than expected,” said Dan Veru, who oversees $3.5 billion as chief investment officer at Palisade Capital Management in Fort Lee, N.J.

“The big question regarding earnings is whether expectations have come down enough so that companies can beat guidance.”

The Commerce Department said Monday that retail sales climbed 1.1 in September after a revised 1.2 percent increase in August that was the biggest since October 2010 and larger than previously reported.

The S&P 500 sank 2.2 percent last week, the biggest retreat since June 1, as the International Monetary Fund reduced its global growth forecasts and earnings projections from Alcoa and AMD disappointed investors.

The benchmark index has rallied 15 percent this year as the Fed announced a third round of bond purchases and companies posted better-than-expected earnings in the first half of 2012.

Some 84 companies in the S&P 500 release results this week. Of the 38 companies in the benchmark index that have reported since Oct. 9, 27 posted earnings that exceeded analyst estimates.

Citigroup jumped 5.5 percent on Monday.

Chief Executive Vikram Pandit is cutting jobs and shedding unwanted assets, including a 49 percent stake in Smith Barney, as he seeks to return capital to shareholders and comply with new regulations on buffers against losses.

Texas Instruments, the largest maker of analog chips, jumped 3.5 percent. Amazon.com is seeking to provide processors for smartphones and tablets by buying Texas Instruments’ mobile-chip unit, Calcalist reported without saying where it got the information.

Advanced Micro Devices added 0.4 percent Monday after a person familiar with the matter said the second-largest maker of processors for personal computers plans to cut as many as 2,340 jobs, or about 20 percent of its workforce. Third-quarter sales will decline about 10 percent from the prior period, a bigger drop than previously forecast, the company said on Oct. 11.

“The upcoming U.S. election and resolution of the fiscal cliff pose a significant risk for equities,” Marko Kolanovic, global head of derivatives and quantitative strategy at JPMorgan Chase, wrote in a report Monday. “Higher taxes could negatively impact all equities with a proportionally larger impact on specific groups such as high-dividend yielding stocks.”

The so-called fiscal cliff refers to the $600 billion of tax increases and spending cuts that will kick in automatically in 2013 unless Congress fails to break a partisan deadlock and reach agreement on the nation’s budget deficit.

The S&P 500 has gained 16 percent on average in election years when a Republican wins and an equal amount when the incumbent remains in the White House, according to Credit Suisse.

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