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Consumer Credit Jumps, Wall Street Slips

Markets recovered from European elections.

Wall Street was able to mostly shake off European elections that tossed incumbents in France and Greece, but uncertainty about the U.S. consumer remains.

 

The S&P Retail Index slipped 0.3 percent, or 1.69 points, to 636.19, as the Dow Jones Industrial Average declined 0.2 percent, or 29.74 points, to 13,008.53.

 

Shares of The Talbots Inc. fell 6.1 percent to $2.61 despite an offer from Sycamore Partners to buy the firm at $3.05 a share. Other decliners included Quiksilver Inc., down 4.2 percent to $3.20; Aeropostale Inc., 3.3 percent to $20.69; Liz Claiborne Inc., 3.2 percent to $12.86, and Abercrombie & Fitch Co., 3 percent to $49.

 

The Federal Reserve said U.S. consumers piled on $21.3 billion in additional credit in March compared with February, an increase of 10.2 percent at an annual rate.

 

Economists expected consumers to add on less than half of that debt, or $10 billion.

 

“The bullish view is that the positive March surprise is a signal that households simply took some time to pay down the credit card debt that they incurred during the holiday season,” said IHS Global Insight U.S. Economist Paul Edelstein. “With those balances at more manageable levels, consumers are now willing to accumulate additional debt.

 

“The bearish view, however, is that with income growth anemic, households needed to use their credit cards to pay for higher gasoline prices in March.” he said. “It is unclear without further evidence which view is correct.”

 

Markets were mixed in Europe. London’s FTSE 100 fell 1.9 percent to 5,655.06, but Milan’s FTSE MIB jumped 2.6 percent to 14,275.35 and Paris’ CAC 40 increased 1.7 percent to 3,214.22.