Wall St rebounds, boosted by data and earnings

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rose on Tuesday, rebounding after a steep drop in the previous session, as December retail sales rose more than expected and investors digested earnings from major financial firms.

The benchmark S&P 500 suffered its biggest daily decline since November 7 on Monday as investors exercised caution amid a ream of negative corporate earnings outlooks that suggested the market may be vulnerable with indexes near record levels.

The S&P's forward price-to-earnings ratio is the highest in nearly seven years, another sign investors may be more selective as the U.S. Federal Reserve begins to slow its stimulus program, which contributed to massive gains in 2013.

"If earnings accelerate, and names like JPMorgan have looked strong, then we should still get good returns," said Mitch Rubin, chief investment officer at RiverPark Advisors in New York. "If not, it will be very difficult for the market to get double-digit market gains amid single-digit earnings growth."

The first of the large banks reported quarterly earnings that beat analysts' estimates, with a mixed outcome on their share prices; JPMorgan Chase & Co gained 0.5 percent to $58 while Wells Fargo lost 0.8 percent to $45.21. The S&P financial index <.SPSY> advanced 0.5 percent.

Retail sales data showed a 0.7 percent increase in December, excluding automobiles, gasoline, building materials and food services, a rise that was bigger than anticipated.

The Dow Jones industrial average was up 77.14 points, or 0.47 percent, at 16,335.08. The Standard & Poor's 500 Index was up 14.34 points, or 0.79 percent, at 1,833.54. The Nasdaq Composite Index was up 51.53 points, or 1.25 percent, at 4,164.83.

Intel Corp shares jumped 3.8 percent to $26.47, helping to boost the Nasdaq, after JPMorgan upgraded the stock to "overweight" from "neutral."

With 5 percent of the S&P 500 companies having reported, 53.8 percent have beaten earnings expectations, according to Thomson Reuters data, below the 63 percent historical average. About 62 percent have beaten on revenue, above the long-term 55 percent average.

Bank of America Corp , Citigroup , Goldman Sachs and Morgan Stanley are among the financial firms scheduled to post results later in the week. Among other sectors, General Electric Co and Intel are also on tap.

Both GameStop Corp and Stratasys Ltd slumped after giving outlooks that were weaker than expected. GameStop lost 18 percent to $37.01 as the S&P's worst performer, while 3D printer maker Stratasys slid 9.3 percent to $117.96.

In contrast, Intuitive Surgical advanced 9.4 percent to $430.23 as the S&P's best performer after the surgical equipment maker gave a strong fourth-quarter outlook.

In merger news after the market closed on Monday, Google Inc agreed to buy smart thermostat maker Nest Labs Inc for $3.2 billion while Charter Communications Inc offered to buy Time Warner Cable for $37.3 billion.

Shares of Google rose 1.7 percent to $1,141.97, while Time Warner Cable rose 2.8 percent to $136.06 and Charter added 1 percent to $135.55.

(Editing by Bernadette Baum)