Wall Street maintained its momentum today, closing at a record high for the second-straight day, but the retail sector took a modest step back from its peak.
The S&P 500 Retailing Industry Group fell 0.4 percent, or 2.98 points, to 722.35 points, after setting a new high water mark Tuesday. The Dow Jones Industrial Average gained 0.3 percent, or 42.47 points, to 14,296.24.
While good for Wall Street and a positive sign that investors see better times ahead, the record levels do not necessarily mean the U.S. has moved beyond its economic troubles. The economy is still weak, propped up by very low interest rates and threatened by deficit wrangling in Washington.
Among the fashion-sector decliners were American Eagle Outfitters, down 10.1 percent to $20.27, and Maidenform Brands Inc., 9 percent to $16.96. Both companies served up disappointing outlooks in their quarterly earnings update this morning.
And J.C. Penney Company Inc. continued to slide, falling 3.5 percent to $14.43. Key investor Vornado Realty Trust sold off 10 million shares of the company earlier this week and Wall Street is growing increasingly antsy over the lack of traction from chief executive office Ron Johnson’s reinvention of the chain.
Citi analyst Deborah Weinswig downgraded Penney’s stock to neutral from buy and gave it a target price of $15.
Weinswig said she came away from a visit with the company’s top brass, including Johnson, “more concerned that [Penney’s] return to topline growth will take longer than expected.”
“We continue to be supporters of the company’s long-term vision, including its shop strategy and new brand launches,” Weinswig said. “However, we are less convinced that the course-correcting strategies being implemented around pricing and marketing will drive meaningful sales improvement.”
In Europe, markets mostly lost ground after Tuesday’s rally to multi-year highs. Milan’s FTSE MIB fell 0.5 percent to 15,899.70, while the CAC 40 in Paris dipped 0.4 percent to 3,773.76. The FTSE 100 in London was roughly flat 6,427.64, as the DAX in Frankfurt was up 0.6 percent to 7,919.33.
The euro was trading at $1.30 against the dollar, while the pound was worth $1.51 and the Swiss franc fetched $1.06.
Retail and luxury stocks also saw a downturn, with most stocks losing ground. Among the day’s biggest decliners were Inditex, down 1.4 percent to 106.10 euros, and The Swatch Group, 1.2 percent to 94.15 Swiss francs. Mulberry’s stocks dipped 0.1 percent to 12.99 pounds after Hermès International issued a denial saying that it was not going to buy out the British brand. PPR was flat at 176.80 euros as rumors circulated that it is planning to buy Italian jewelry brand Pomellato.
Among the day’s strongest gainers were Asos.com, which climbed 3.3 percent to 29.70 pounds, and Brunello Cucinelli, which advanced 1.6 percent to 16.95 euros.