By Caroline Valetkevitch
NEW YORK (Reuters) - Citigroup's strong earnings helped the S&P 500 end higher on Monday for an eighth straight day, the longest such streak since mid-January, though weak retail sales limited gains in a session with the lowest volume of the year.
The Dow Jones industrial average and the S&P 500 finished at record closing highs for the third consecutive session. The Nasdaq scored its highest close since September 2000.
Volume was the lightest of any full trading day this year, with just 4.91 billion shares trading on exchanges, based on the latest available data. This year, daily volume has averaged 6.4 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT.
Shares of Citigroup <C.N> climbed 2 percent to $51.81 after the third-largest U.S. bank by assets reported a 26 percent increase in adjusted quarterly profit. The S&P 500 financial industry sector index <.SPSY> gained 0.4 percent.
The day's economic data was mixed, however, with growth in New York state manufacturing for July accelerating, while June retail sales fell short of expectations. May business inventories barely increased.
Investors are watching for changes in earnings or economic news that could derail the market's rally. Stocks have climbed this year, except for a late-May selloff triggered by Federal Reserve Chairman Ben Bernanke's comments, which raised the prospect of trimming the Fed's $85 billion in monthly stimulus. The S&P 500 has gained 18 percent since December 31.
"Earnings so far seem to have gotten off to a pretty decent start," said Cam Albright, director of asset allocation for Wilmington Trust Investment Advisors in Wilmington, Delaware. "We think there was a lot of bringing down of expectations prior to reaching earnings season, so that is probably giving the earnings numbers a little bit more cushion."
Leap Wireless International Inc <LEAP.O> shares more than doubled after AT&T Inc <T.N> said late Friday it would buy the company for $1.19 billion. At least two brokerages raised their ratings on Leap's stock. Leap, which was among the Nasdaq's most actively traded stocks, ended at $16.95 - up 112.41 percent.
The Dow Jones industrial average <.DJI> rose 19.96 points, or 0.13 percent, to 15,484.26, a record closing high. The Standard & Poor's 500 Index <.SPX> gained 2.31 points, or 0.14 percent, to finish at 1,682.50, also a record. The Nasdaq Composite Index <.IXIC> advanced 7.41 points, or 0.21 percent, to end at 3,607.49 - its highest close since September 2000.
Much of the focus this week will be on earnings. Analysts expect S&P 500 companies' second-quarter earnings to have grown 2.8 percent from a year earlier, with revenue up 1.5 percent from a year ago, Thomson Reuters data showed.
While earnings growth has slowed in recent quarters, it is expected to pick up the last half of the year. Bank of America-Merrill Lynch raised its year-end target for the S&P 500 to 1,750 from 1,600, citing expected earnings growth.
Most companies also are exceeding analysts' earnings expectations, as they have done in recent quarters. Of the companies that have reported second-quarter results so far, 66.7 percent are beating earnings estimates. Revenue results, however, are faring worse and are likely to remain a concern for investors, analysts said.
S&P 500 industrial shares rose after airlines expressed confidence over the weekend in the safety of Boeing's <BA.N> 787 Dreamliner following a fire on one of the jets last week. Boeing gained 3.7 percent to $105.66 and ranked as the Dow's top performer.
This week's agenda includes comments from Bernanke, who is scheduled to testify about monetary policy before the House Financial Services Committee on Wednesday. He will appear on Thursday before the Senate Banking Committee.
"Given what he has been saying, I don't expect much different," Albright said.
First Solar Inc <FSLR.O> was the S&P 500's best percentage gainer, rising 5.5 percent to $50.27.
Shares of Tiffany & Co <TIF.N> jumped 3.6 percent to $79.78 in active trading after Stifel Nicolaus upgraded the high-end jeweler's stock to a "buy" from a "hold" and set a price target of $92.
On the flip side, shares of Ingredion <INGR.N> dropped 9.9 percent to $62.57, a day after the company warned on earnings.
Utilities outperformed other sectors in the S&P 500, with the sector index <.SPLRCU> up 1.6 percent. Utility companies, including FirstEnergy Corp <FE.N> and Public Service Enterprise Group Inc <PEG.N>, were among the sector's best performers after power grid operators in the U.S. Northeast said they had enough electricity to keep air conditioners running this week through an anticipated heat wave.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 19 to 11, while on the Nasdaq, 16 stocks rose for nearly every nine that fell.
(Editing by Kenneth Barry, Nick Zieminski and Jan Paschal)