US STOCKS-Market up on retail sales gain, but Wachovia drags

(Updates to midday, changes byline)

By Cal Mankowski

NEW YORK, April 14 (Reuters) - U.S. stocks rose slightly on Monday as a surprising rise in retail sales data for March was offset by an unexpected quarterly loss from Wachovia Corp (WB.N: Quote, Profile, Research) that hurt bank shares.

Goldman Sachs added to the market's negative tone after it said the quarterly earnings season which is just starting looks "awful" and that reports still to come will be generally disappointing and drive the S&P 500 lower in coming weeks.

Wachovia said it would cut its dividend, eliminate jobs and raise capital of $7 billion after becoming the latest casualty of the global credit crunch. For details, see [ID:nN14343221]. The No. 4 U.S. bank's stock fell 10 percent, dragging the S&P financial sector index down 2.1 percent.

But retail sales kept a floor under the market after data showed an unexpected increase in March, pushed up by a jump in gasoline sales, according to a government report. An S&P index of retailers' shares .RLX was up 0.73 percent.

With earnings season in full swing, investors are taking their trading cues from corporate results. Wall Street analysts expect S&P 500 earnings to show a 13.8 percent decline in quarterly profits compared with an 11.8 percent drop projected one week ago, according to Reuters Estimates.

"People are questioning if we're in a short shallow recession" or something that will turn out to be deeper and more prolonged, said Brian Gendreau, investment strategist at ING Investment Management in New York.

"The fact that the market is not down today is a good sign" and shows that investors are evenly divided about the outlook, Gendreau said.