Wall Street opened higher on Monday as retail sales in March eased concerns about a slowing economic recovery and Citigroup earnings helped lift bank shares.
The gains in the benchmark S&P index come on the heels of a 2-percent drop last week and a 2.7 percent loss over the prior two weeks, its worst two-week slide since November, on increasing concerns about the euro-zone debt crisis and weaker-than-expected economic data.
Retail sales rose more than expected in March as Americans shrugged off high gasoline prices and bought a range of goods, indicating economic growth in the first quarter did not soften as much as many had feared.
A recent spate of soft economic data, highlighted by the March payrolls report, had increased worry the recovery in the economy had begun to slow.
But the economic picture was not entirely upbeat as the New York Federal Reserve said the pace of manufacturing growth in New York state slowed sharply in April to its lowest level in five months.
On balance, things are better than they were last year. Earnings will bear that out, and we will also continue to see more good news than bad, said Tim Holland, co-portfolio manager, Aston/TAMRO Diversified Equity Fund in Alexandria, Virginia.
As you work through the next month or two, people will come to the conclusion this isn't a repeat of 2011, the economy is much stronger, earnings are much stronger this time around.
Earnings season will pick up steam this week, with 86 S&P 500 companies scheduled to report results. According to Thomson Reuters data through Friday, of the 32 companies in the S&P 500 that have reported results to date for the first quarter of 2012, 75 percent have reported earnings above analyst expectations.
Later in the session, the Commerce Department issues business inventories data for February at 10:00 a.m. EDT (1400 GMT). The market expects a 0.6 percent rise versus a 0.7 percent increase in January.
The Dow Jones industrial average <.DJI> gained 113.90 points, or 0.89 percent, to 12,963.49. The Standard & Poor's 500 Index <.SPX> rose 7.79 points, or 0.57 percent, to 1,378.05. The Nasdaq Composite Index <.IXIC> climbed 10.89 points, or 0.36 percent, to 3,022.22.
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(Editing by Padraic Cassidy)