US STOCKS-Wall St gains as bets of supersized rate hike recede

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15/07/2022 18:02

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    * Citigroup jumps after results 
    * UnitedHealth lifts profit view, shares climb 
    * June retail sales +1% vs est. 0.8%
    * Indexes up: Dow 1.80%, S&P 1.56%, Nasdaq 1.32%

 (Adds comment, details; updates prices)
    By Anisha Sircar and Sruthi Shankar
    July 15 (Reuters) - U.S. stocks climbed on Friday as upbeat
retail sales data allayed some concerns about an imminent
recession, while investors scaled back bets of a supersized
interest rate hike in July after comments from Federal Reserve
policymakers.
    The benchmark S&P 500  .SPX  and the blue-chip Dow  .DJI 
indexes rose after a five-day run of losses, which were mostly
sparked by worries of a 100-basis-point interest rate hike at
the coming policy meeting following hot inflation data.
    Moving interest rates too dramatically could undermine the
positive trends still seen in the economy and add to the already
large amount of uncertainty, Atlanta Fed President Raphael
Bostic said. Two of the Fed's most hawkish policymakers said on
Thursday they favored another 75-basis-point rate increase this
month. urn:newsml:reuters.com:*:nS0N2OC020  urn:newsml:reuters.com:*:nL1N2YV22Q
    Banks earnings also hit full stride, with Citigroup  C.N ,
jumping 11.1% after posting a smaller-than-expected 27% drop in
quarterly profit on usual strength in its treasury services
business and as its trading desks cashed in on market
volatility.  urn:newsml:reuters.com:*:nL4N2YW23W
    Wells Fargo  WFC.N  gained 5.9% even as it set aside more
money to cover potential loan losses.  urn:newsml:reuters.com:*:nL4N2YW2B2
    The wider S&P banking index  .SPXBK  jumped 5.0% after
sinking to December 2020 lows in the previous session when
Morgan Stanley  MS.N  and JPMorgan Chase & Co  JPM.N  posted
downbeat results and warned of economic headwinds.
    "We are likely to see less Citigroup, more Wells Fargo type
of earnings, where companies are potentially warning and guiding
down, but the reaction could be that expectations were already
so low, so you could see a buy-the-dip mentality," said Dennis
Dick, proprietary trader at Bright Trading LLC.
    Next week, a slew of major companies including Goldman Sachs
 GS.N , Johnson & Johnson  JNJ.N , Netflix  NFLX.O  and Tesla
 TSLA.O  are scheduled to report earnings.
    Analysts expect aggregate S&P 500 second-quarter profit
growth of 5.6% on a year-on-year basis, less than the 6.8%
forecast at the beginning of the quarter, according to
Refinitiv.
    Despite Friday's bounce, all three indexes were set to book
weekly losses.
    "The market is due for a short-term snapback and because we
got better-than-expected results from Citigroup and retail
sales, that gave fundamental reasons for investors to be
optimistic," said Sam Stovall, chief investment strategist at
CFRA.
    Data showed U.S. retail sales rebounded strongly in June as
Americans spent more on gasoline and other goods amid soaring
inflation.  urn:newsml:reuters.com:*:nL1N2YW0ZO
    Meanwhile, a University of Michigan survey showed U.S.
consumers tempered their inflation expectations in July
alongside a sharp drop in gasoline prices over the past month.
 urn:newsml:reuters.com:*:nN9N2WB01D
    Traders scaled back bets of a full percentage point rise
rate hike later this month, with fed fund futures now pricing in
about a 30% chance compared with 80% earlier this week,
according to the CME Group's Fedwatch tool.
    At 12:29 p.m. ET, the Dow Jones Industrial Average  .DJI 
was up 550.66 points, or 1.80%, at 31,180.83, the S&P 500  .SPX 
was up 59.21 points, or 1.56%, at 3,849.59, and the Nasdaq
Composite  .IXIC  was up 149.06 points, or 1.32%, at 11,400.24.
    BlackRock  BLK.N  firmed 1.6% despite posting a
bigger-than-expected drop in quarterly profit.  urn:newsml:reuters.com:*:nL4N2YW26G
    UnitedHealth Group Inc  UNH.N  rose 5.1% after lifting its
full-year profit forecast for a second straight quarter.
 urn:newsml:reuters.com:*:nL4N2YW24F
    Shares of Pinterest  PINS.N  rallied 15.2% following a
report that activist investor Elliott Management has taken a
stake of more than 9% in the social media company.  urn:newsml:reuters.com:*:nL4N2YW26B
    Advancing issues outnumbered decliners by a 4.65-to-1 ratio
on the NYSE and a 2.36-to-1 ratio on the Nasdaq.
    The S&P index recorded one new 52-week high and 31 new lows,
while the Nasdaq recorded 27 new highs and 97 new lows.

 (Reporting by Anisha Sircar and Sruthi Shankar in Bengaluru;
Editing by Saumyadeb Chakrabarty and Aditya Soni)
 ((Anisha.Sircar@thomsonreuters.com;))