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Confidence Soars, Stocks Sag

U.S. retail stocks retreat despite five-year high in consumer sentiment.

U.S. retail stocks fell 0.3 percent today even as consumer confidence hit a five-year high.

 

The S&P 500 Retailing Industry Group fell 1.74 points, to 644.41, underperforming the Dow Jones Industrial Average, which was pressured by banking stocks, but managed a increase of 2.46 points to 13,328.85.

 

The decliners included Quiksilver Inc., down 3.5 percent to $3.35; Tilly’s Inc., 2.5 percent to $16.09; The TJX Cos. Inc., 2.4 percent to $42.83, and Warnaco Group Inc., 2 percent to $50.02.

 

Investor sentiment was out of step with consumer sentiment. Consumer confidence hit a five-year high this month, according to a preliminary reading of the Thomson Reuters/University of Michigan Surveys of Consumers index on sentiment.

 

The index rose to 83.1 from 78.3 in September — the strongest reading since September 2007. That surprised economists who on average expected the measure of consumer confidence to fall to 77.7.

 

“More consumers anticipate better job prospects and consider their current financial situation as favorable,” said Leslie Levesque, senior economist at IHS Global Insight.

 

The unemployment rate in September fell below 8 percent for the first time since January 2009.

 

“Despite the improved reporting on current financial situations, respondents were more pessimistic about their buying conditions,” Levesque said, of survey used to compile the index on sentiment. “Consumers continue to look for ‘deals’ and will hold out for a good discount. The holiday shopping season is approaching and ‘Black Friday’ discounts are likely in the back of some consumers’ minds.”

 

Investors were also feeling bearish in Europe, where the FTSE MIB in Milan led the retreat.

 

The Italian market fell 0.8 percent to 15,511.94, followed by the CAC 40 in Paris and the DAX in Frankfurt, which were both down 0.7 percent to 3,389.08 and to 7,232.49, respectively. The FTSE 100 in London fell 0.6 percent to 5,793.32.

 

Retail and luxury stocks were mixed.

 

Geox gained 5 percent to 2.26 euros while French Connection climbed 3 percent to 0.24 pounds.

 

Losing ground were Carrefour, down 2.1 percent to 16.23 euros; Mulberry Group, 2.4 percent to 12.30 pounds, and Metro AG, 1.5 percent to 20.24 euros.

 

The euro traded at $1.29 versus the dollar while the pound traded at $1.60.