Stock markets swooned Tuesday as investors worried about Greece’s down-to-the-wire debt negotiations, pushing Wall Street to its worst trading day so far this year.
U.S. retail stocks fared relatively well, though, as the sector is seen as insulated from the mounting troubles in Europe. The S&P Retail Index slipped 1 percent, or 5.83 points, to 580.50. Even as the sector backed away from its all-time high of 587.84, set Monday, it is still up 11 percent so far this year, aided by solid February sales and quicker job growth.
The Dow Jones Industrial Average fell 1.6 percent, or 203.66 points, to 12,759.15, the worst performance for blue-chip stocks since Dec. 8. The market is still ahead 4.4 percent so far this year.
The day’s fashion decliners included Fossil Inc., down 4.6 percent to $119.93; Lululemon Athletica Inc., 4 percent to $66.05; Coach Inc., 4 percent to $73.12; Michael Kors Holdings Ltd., 3.7 percent to $46.81 and Ralph Lauren Corp., 3.6 percent to $170.51.
Shares of Kenneth Cole Productions Inc. slipped 0.1 percent to $15.79. The company said Tuesday that a special committee of the firm’s board of directors hired Bank of America Merrill Lynch to help it evaluate Kenneth Cole’s offer to buy out other shareholders for $15 a share. The committee, in a letter filed with the Securities and Exchange Commission on Tuesday in connection with the hiring of Bank of America, said it “has also been authorized to solicit expressions of interest or other proposals for alternative transactions...and to review any such alternative transaction that may be proposed by third parties.” The letter, dated Feb. 27, asked the designer to “reconsider his position that he is unwilling to consider any alternative proposals.” In Tuesday’s announcement, the company said Cole declined to change his stance.
Despite Tuesday’s stock market retreat, as well as concerns from some quarters that retail stocks are due for a pullback, the business outlook for the sector appears to be brightening.
“The number-one thing for consumers is income, and a big driver of income is jobs,” said James Smith, chief economist at Parsec Financial Management, which has about $1.2 billion under management. “We have pretty healthy job growth at last, and it’s likely to get a whole lot better. That’s the number-one driver of confidence. Consumers are in the mood to shop for practically everything.”
Smith said that the extension of the payroll tax cut would more than offset the rise in gas prices and that the U.S. economy was not overly exposed to Europe’s troubles. “The Euro zone is a disaster,” he said. “It’s in a recession. It could get worse. It might be a depression.”
Greece is scrambling to convince bondholders, mainly European banks, to agree to a debt swap that would give investors less favorable terms. The deadline is Thursday, and Greece needs to negotiate these new debt deals with bondholders in order to unlock a further round of bailout funds from the International Monetary Fund and the European Union.
Paris’ CAC 40 slipped 3.6 percent to 3,362.56 while Milan’s FTSE MIB and Frankfurt’s DAX both tumbled 3.4 percent to close at 16,218.06 and at 6,633.11, respectively, and London’s FTSE 100 fell 1.9 percent to 5,765.80.
The region’s biggest decliners included Ferragamo, down 5.1 percent to 14.02 euros; Yoox.com, 4.4 percent to 10 euros; Tod’s, 3.2 percent to 75.10 euros, and Geox, 3.8 percent to 2.43 euros. The euro traded at $1.32.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)