The stock market is looking to wipe out nearly a week in the red as the S&P 500 closes up 1.7%. Indeed, after closing its fifth straight day of declines on Thursday, the longest losing streak since June 14, it seems the stock market is attempting a mild turnaround. Why were stocks up today?
Today’s rally was likely the result of strong retail sales data. Retail sales rose 1% in June, according to the Commerce Department. Consumer spending increased nearly across the board, especially for items that recently saw a price increase. Gasoline, groceries and furniture were among the top spending categories, which might come as a surprise given their recent surges in price. Drivers spent 3.6% more at gas stations in June than in May, despite fuel costs jumping nearly 12%. This actually reflects a slight decrease in driving last month, in no small part due to the highest gas prices in decades.
Many economic experts are growing concerned whether consumer spending can continue to grow, especially as inflation ramps up faster than wage growth.
Jeff Harmening, Chief Executive of General Mills (NYSE:GIS), commented on the state of demand in the U.S. in a June earnings call.
Consumers are still spending quite a bit of money. Now as they look ahead, they get nervous because they see inflation and so forth. But right now, the consumer is in a decent place.
Why Are Stocks Up?
The market may also be responding to some surprising earnings win this morning, including from Citigroup (NYSE:C).
BlackRock (NYSE:BLK), Citigroup and UnitedHealth (NYSE:UNH) each gained today on the back of quarterly financial results. Citigroup was the leader of the pack, surging 13% after handily beating profit and revenue estimates. Citi reported earnings of $2.19 per share, compared to $1.68 expected. The bank also reported $19.64 billion in revenue, edging out the $18.22 billion consensus estimate. It largely benefited from climbing interest rates and solid trading performance.
“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels,” Citigroup Chief Executive Jane Fraser said in the call this morning.
Citi proved the only top four bank to beat its revenue expectations this week. The bank did also announce it would be pausing its share repurchases as a way to ensure it has enough capital.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.