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Retail Stocks Slip 1.1% on Wall Street

Kansas Fed chief pushes for tighter monetary policy.

Retail shares fell 1.1 percent today on a down day for Wall Street as the head of the Kansas City Federal Reserve said the U.S. economy was strong enough for the central bank to pull back some of its support.

The Federal Reserve has worked to keep interest rates low to help spur the recovery, but in the process it has also juiced up the stock market, which is coming off all-time highs set last month.

The S&P 500 Retailing Industry Group declined 8.77 points to 780.30 today as the Dow Jones Industrial Average slipped 0.5 percent, or 76.49 points, to 15,177.54.

The decliners included Dillard’s Inc., 5.1 percent to $86.81; Sears Holdings Corp., 2.5 percent to $48.04; Express Inc., 1.9 percent to $21.21, and Jos. A. Bank Clothiers Inc., 1.5 percent to $44.70.

Esther George, chief executive officer of the Kansas City and a member of the board the sets monetary policy for the country, said the economy had been strengthening, albeit slowly, and is now 8 percent larger than it was in 2009.

The Fed has been supporting that growth, in part by buying back $40 billion of mortgage-backed securities and $45 billion in Treasury bonds each month.

“I support slowing the pace of asset purchases as an appropriate next step for monetary policy,” George said. “A slowing in the pace of purchases could be viewed as applying less pressure to the gas pedal, rather than stepping on the brake.”

Investors are looking forward to Friday’s employment report for signs of whether the economy is indeed strengthening enough to stand on its own. Economists project the nation added 165,000 jobs while unemployment held steady at 7.5 percent.

In Europe, markets were on the rebound in Europe.

The FTSE 100 in London and Milan’s FTSE MIB both gained 0.5 percent, to 6,558.58 and 17,135.48, respectively. The DAX in Frankfurt and Paris’ CAC 40 both rose 0.1 percent, to 8,295.96 and 3,925.83, respectively.

The pound traded at $1.51 against the dollar and the euro was valued at $1.31. Retail and luxury stocks were mostly up, with the day’s strongest gainers including Safilo, up 6.2 percent to 15.34 euros; Mulberry, 1.7 percent to 10.87; and Inditex, 0.7 percent to 97.92 euros.

Stocks losing ground included Yoox, down 0.9 percent to 15.46 euros, and Hermès International, 0.5 percent to 266.55 euros.