NEW YORK - US shares leapt higher Monday after banking powerhouse Citigroup said its profits topped five billion dollars and an investor group agreed to buy the Sallie Mae student loan giant for 25 billion dollars.
A government report showing that March retail sales, viewed as a key indicator of economic prosperity, surged a bigger-than-forecast 0.7 percent also cheered investors.
The Dow Jones Industrial Average closed up a hefty 108.33 points (0.86 percent) at 12,720.46.
The Nasdaq composite rose a strong 26.39 points (1.06 percent) to 2,518.33 while the Standard and Poor's 500 broad-market index advanced a significant 15.62 points (1.08 percent) to 1,468.47.
"The market is strong on the back of Citigroup's earnings," said Mace Blicksilver, an analyst at Marblehead Asset Management.
Shares surged after banking bellwether Citigroup announced profits of 5.01 billion dollars for its first-quarter earnings period.
Although that marked a profit slowdown, analysts are optimistic about a wide-ranging overhaul of the banking titan announced last week by top management.
Citigroup's shares spiked 1.33 dollars, or over two percent, to close at 52.93 dollars.
Its results included a previously disclosed charge of 1.38 billion dollars linked to a wide-ranging revamp that will see 17,000 job losses and a shifting of 9,500 positions to "lower cost locations" as some corporate operations are consolidated.
"We achieved these results while completing our structural expense review, which will help us become a leaner, more efficient organization and lower our rate of expense growth," said chairman and chief executive Charles Prince.
In the latest in a wave of big private equity deals swamping US financial markets, an investor group headed by JC Flowers & Co said it had signed a definitive agreement to purchase SLM Corporation, or Sallie Mae, for 60 dollars a share.
Sallie Mae was established in 1972 as a government-sponsored corporation to finance low cost student loans. It began privatizing in 1997, and severed ties to the federal government in 2004.
The private equity groups are keen to get their hands on Sallie Mae because of its vast loan portfolio, around 142 billion dollars, and steady income stream tied to millions of students.
Sallie Mae shares jumped 8.59 dollars or 18 percent to 55.35 dollars.
Rounding off the day's upbeat news were the latest retail sales numbers, which showed Americans holding true to their popular image as voracious spenders.
The Commerce Department's monthly snapshot on retail sales defied most Wall Street analysts who had only anticipated a 0.4 percent rise in March sales.
The sales gain was also the strongest since December, when sales are heavily bolstered by shoppers snapping up Christmas gifts.
The report was welcomed by Wall Street as it appeared to show American consumers' flocked to shopping malls and stores last month despite a housing market slump and high gasoline prices taking a bite out of their incomes.
In other news, energy giant ConocoPhillips and food group Tyson Foods said they had teamed up to launch a new revolutionary biofuel venture that will use beef, pork and poultry by-product fat to create a new diesel fuel.
The firms claim they are positioned to produce "the next generation of renewable diesel fuel" for environmentally conscious drivers.
ConocoPhillips increased six cents to 70.60 and Tyson rose 45 cents to 20.90.
Bond prices rose. The yield on the 10-year US Treasury bond fell to 4.735 percent from 4.761 percent late Friday and that on the 30-year bond declined to 4.890 percent against 4.926 percent. Bond yields and prices move in opposite directions.
04/16/2007 20:47 GMT