Stocks Gain on Hopes of Spanish Bailout

Obama said weakness in Europe could hit the U.S.

Wall Street ended on an up note today, with retail stocks gaining 1.3 percent as investors grew more confident that Europe would step up and help secure Spain’s ailing finances.


The S&P Retail Index rose 8.08 points to 613.39, as the Dow Jones Industrial Average increased 0.8 percent, or 93.24 points, to 12,554.20. For the week, retail stocks gained 4.5 percent as the Dow rose 3.6 percent, recovering from stinging declines after disappointing May job gains a week ago.


Spain’s finances continued to dominate the global market. The country this week said it was being shut out of the capital markets and Fitch downgraded its credit rating on the country to “BBB,” or two grades away from junk territory.


Spain is deciding how to recapitalize its ailing banking system, which needs an injection of about 60 billion euros to stay afloat, according to Standard & Poor’s. Spain denied today that it was ready to ask the European Union for bailout funds, but Wall Street investors were buoyed by reports to the contrary.


At a White House news conference today, President Obama warned that a deepening crisis in the Euro zone could impact U.S. exports.


“Keep in mind that this obviously can have a potential impact on us because Europe is our largest trading partner,” Obama said. “The good news is we did a lot work in 2009 [and] 2010 to put our financial system on much more solid footing…which means we can absorb some shocks that might come across from the Atlantic.”


One of the day’s strongest gainers was Quiksilver Inc., which rose 12.3 percent to $2.74 after the company narrowed second-quarter losses and said its European unit managed to post a slight sales increase constant currencies. Also gaining were Tumi Holdings Inc., 11.8 percent to $18.89; Michael Kors Holdings Ltd., 6.5 percent to $38.37, and Vera Bradley Inc., 6.1 percent to $22.81.


In Europe, Milan’s FTSE MIB fell 0.7 percent to 13,445.46, followed by Paris’ CAC 40, which sank 0.6 percent to 3,051.69. The FTSE 100 in London and the DAX in Frankfurt each fell 0.2 percent, to 5,435.08 and to 6,130.82, respectively.


Retail and luxury stocks were mostly down, with the day’s biggest decliners including Hugo Boss, which sank 2.8 percent to 74.60 euros, and LVMH Moët Hennessy Louis Vuitton, which was down 1.4 percent to 119.35 euros.


Marks & Spencer Group fell 1.6 percent to 3.35 pounds after the retailer said it was branching into high street banking with the first retail branch, at Marble Arch in London, set to open next month. Among the stocks that made gains on Friday were Unilever, which was up 1.8 percent to 25.40 euros; Geox, which climbed 0.6 percent to 1.79 euros, and Beiersdorf, which advanced 0.8 percent to 52.54 euros.


The euro traded at $1.26 while the pound traded at $1.55.