The economic outlook is just bad enough that investors are starting to think it looks good.
With growth in the U.S. threatened by continued weakness in the job front and the debt crisis still clamping down on Europe, investors pushed up stocks today on the theory that the Federal Reserve might be ready to step in and help boost the economy. The Ben S. Bernanke-led Fed wraps up a two-day meeting on monetary policy Wednesday and is expected to weigh in with a statement midday.
Ahead of that update, the S&P Retail Index rose 0.8 percent, or 5.19 points, to 627.05 as the Dow Jones Industrial Average increased 0.8 percent, or 95.51 points, to 12,837.33. The retail gainers included The Bon-Ton Stores Inc., which shot up 10.3 percent to $5.91 after agreeing to sell its credit card portfolio, and Zumiez Inc., which rose 4.6 percent to $41.16 after inking a $75 million deal to acquire Austrian retailer Blue Tomato.
Also gaining ground were G-III Apparel Group Ltd., up 6.1 percent to $24.38; Sears Holdings Corp., 5.4 percent to $54.44; Michael Kors Holdings Ltd., 4.3 percent to $41.11, and Nordstrom Inc., 4.1 percent to $51.03.
Shares of J.C. Penney Co. Inc. fell 8.6 percent to $22.25 as investors reacted to the departure of president Michael Francis.
In Europe, markets gained ground even as traders kept close watch on borrowing costs for Spain. Investors have also been keeping close tabs on Italy’s borrowing costs, but were more bullish today than they have been.
Milan’s FTSE MIB gained 3.4 percent to 13,445.46 as Frankfurt’s DAX rose 1.8 percent to 6,363.36, London’s FTSE 100 increased 1.7 percent to 5,586.21 and Paris’ CAC 40 advanced 1.7 percent to 3,117.92.