Stocks rise on positive economic reports

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NEW YORK (CNNMoney) -- U.S. stocks held modest gains Monday as investors digested the latest corporate earnings and economic data, including a sharp rise in retail sales.

The Dow Jones industrial average and the S&P 500 were both up about 0.4%. The Nasdaq gained 0.3%.

Bank stocks were among the best performers after Citigroup (C, Fortune 500) reported third-quarter earnings that topped analysts' forecasts. Shares of Citi rose about 5%. Bank of America (BAC, Fortune 500) and JPMorgan (JPM, Fortune 500) were also higher.

Economic reports released Monday showed signs of improvement in retail sales and manufacturing. Retail sales jumped 1.1% in September, boosted by higher gas prices and electronic sales, according to the Census Bureau. Analysts expected a 0.7% rise.

The Federal Reserve Bank of New York's Empire State Manufacturing Index remained in negative territory in October, but improved to a reading of minus 6.2 compared to minus 10.4 in September.

"The data are giving a lift to the market here," said Peter Cardillo, chief market economist at Rockwell Global Capital. But he cautioned that the gains may not hold since the market "is in the midst of a pull-back."

Stocks declined more than 2% last week, with the Dow logging its biggest weekly decline since June 1.

The retreat comes as investors anticipate lackluster profit and sales data from corporate America. Companies in the S&P 500 are expected to report third-quarter aggregate earnings that were down 1% from last year, according to S&P Capital IQ.

Investors are mostly concerned with the earnings outlook for the rest of the year, according to Cardillo. "With the upcoming elections and Europe still unsettled, the guidance is going to be murky," he said.

Fear & Greed Index

On Sunday, Federal Reserve Chairman Ben Bernanke gave a speech in Tokyo defending the U.S. central bank. He insisted that the Fed's actions haven't hindered economic growth in developing countries, contrary to criticism in the international community.

Overseas, a report Monday showed that inflation in China slowed in September. Chinese consumers paid 1.9% more for goods in September than they did a year earlier, the government's National Bureau of Statistics reported. That's down from a 2% increase in August.

Asian markets ended mixed. The Shanghai Composite slipped 0.3%, the Hang Seng in Hong Kong was little changed, and Japan's Nikkei ticked up 0.5%.

European stocks closed higher. Britain's FTSE 100 edged up 0.3%, the DAX in Germany added 0.4% and France's CAC 40 rose 0.8%.

Related: Bernanke answers Fed's global critics

Companies: Shares of toy maker Hasbro (HAS) fell more than 2% after analysts at Goldman Sachs downgraded the stock to sell. Goldman cited a sharp decline in the amount of money American consumers spend on toys and games. Shares of rival toy company Mattel (MAT, Fortune 500) also dipped.

Eli Lilly (LLY, Fortune 500) shares rose after the pharmaceutical company said a study of its gastric cancer drug showed positive results.

Shares of rival drug maker Abbott (ABT, Fortune 500) rose after it announced upbeat results for an initial study of its treatment of hepatitis C.

Texas Instruments (TXN, Fortune 500) shares gained on speculation that Amazon (AMZN, Fortune 500) is in talks to buy TI's smartphone microchip business.

Sprint Nextel (S, Fortune 500) said early Monday that it reached an agreement to sell a 70% stake to Japan's Softbank for $20.1 billion.

Media conglomerate Gannett (GCI, Fortune 500) and brokerage Charles Schwab (SCHW, Fortune 500) both reported earnings that beat forecasts. Results are due later in the week from blue-chip companies including Goldman Sachs (GS, Fortune 500), IBM (IBM, Fortune 500) and Intel (INTC, Fortune 500).

Currencies and commodities: The dollar rose against the euro, the British pound and Japanese yen.

Oil for November delivery sank $1.32 to $90.53 a barrel.

Gold futures for December delivery dropped $24.40 to $1,735.30 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.67% from 1.66% late Friday.

First Published: October 15, 2012: 9:48 AM ET

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