U.S. stocks advanced Monday, with the Standard & Poor’s 500 Index rebounding from the biggest weekly loss in three months, as Citigroup Inc. rallied on better-than-forecast earnings, and Internet shares rebounded.
Citigroup climbed 3 percent, leading financial shares higher as trading revenue topped estimates. Facebook Inc. and Netflix Inc. paced gains in Internet stocks. Apple Inc. rose 1.3 percent after Barclays Plc advised investors to buy shares in the world’s biggest company by market value.
The Dow Jones industrial average climbed 111.61, or 0.66 percent, to 17,055.42. The Nasdaq rose 24.93, or 0.56 percent, to 4,440.42. The S&P 500 added 9.53, or 0.48 percent to close at 1,977.10.
“The earnings report out of Citigroup helped to lift the market,” said Robert Pavlik, who helps oversee $4.5 billion as chief market strategist at Banyan Partners LLC in New York. “The market has more room to run. It’s going to be interesting to watch the amount of strength that it carries day to day.”
Goldman Sachs Group Inc. raised its S&P 500 forecast for 2014 Monday to 2,050 from 1,900. Rising earnings and faster economic growth will push equities higher, and stocks are still attractive relative to bonds, according to a research report from David Kostin, chief equity U.S. strategist at the bank.
The S&P 500 slid 0.9 percent last week amid signs of financial stress at a Portuguese bank and speculation that the recent rally is overdone. The benchmark gauge closed at an all-time high, and the Dow topped 17,000 for the first time since July 3. The S&P 500 hasn’t had a drop of 10 percent in more than two years, and the gauge trades at a valuation of 18 times reported earnings, the highest since 2010.
The third-largest U.S. bank by assets also agreed to pay $7 billion in fines and consumer relief to resolve government claims that it misled investors about the quality of mortgage- backed bonds sold before the 2008 financial crisis. Bank of America Corp. added 1.2 percent, JPMorgan Chase rose 0.9 percent, and Goldman Sachs increased 1.3 percent.
Investors will be watching statements from central banks and economic reports this week for clues to the strength of the global economy.
Federal Reserve Chairwoman Janet Yellen is due to testify to U.S. lawmakers. Yellen will deliver her semi-annual monetary policy testimony to the Senate Banking Committee today and to the House Committee on Financial Services the following day.
Minutes of the Fed’s June meeting released last week showed officials have agreed they’ll end their asset-purchase program in October if the economy holds up. At the same time, the policy makers said the central bank should continue to support favorable financial conditions needed to sustain growth, according to the minutes.
Three rounds of Fed bond-buying have helped propel the S&P 500 higher by more than 190 percent during the current five-year bull market.
Among economic reports this week, investors will receive data on housing, manufacturing, labor and inflation.