U.S. retail stocks recorded their fifth consecutive positive trading session Thursday amid indications of at least a modest economic turnaround.
Just after trading closed in New York, the Federal Reserve raised the discount rate banks pay on short-term loans to 0.75 percent from 0.50 percent, effective today, a move intended to steer borrowers toward the private markets following the Fed’s unprecedented efforts to keep credit flowing and bolster the economy.
“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the Fed said. “The modifications are not expected to lead to tighter financial conditions for households and businesses.”
The S&P Retail Index rose 3.12 points, or 0.8 percent, to 412.76, its highest close since Jan. 11 and its third straight above the 400 mark. The gain was a fraction behind the percentage pickup of the Dow Jones Industrial Average, which rose 83.66 points, also 0.8 percent, to 10,392.90. The S&P 500 and Nasdaq Composite both gained 0.7 percent, and markets in the U.K., France, Germany, China and Japan all ascended, as well. Hong Kong’s Hang Seng Index, however, declined 0.5 percent to 20,422.15.
The stock markets rallied on the increase in the manufacturing index of the Philadelphia Federal Reserve. The improvement in retail stocks came despite a down day for Wal-Mart Stores Inc. The giant retailer’s shares fell 1.1 percent to $53.47 as a weak outlook offset higher fourth-quarter earnings.
Also on Thursday, The Conference Board reported that its Leading Economic Index rose 0.3 percent in January, lower than December’s 1.2 percent gain and the 1.1 percent boost in November, but still the 10th consecutive month of increases.
“The U.S. LEI has risen steadily for nearly a year, led by an improvement in financial markets and a manufacturing upturn,” said Ataman Ozyildirim, an economist at The Conference Board. “Consumer expectations and housing permits have also contributed to these gains over this period, but to a lesser extent — especially in recent months.”
With Thursday’s advance, the S&P Retail Index is up slightly this year, ahead of its 411.12 close of Dec. 31.
Shares of Walgreen Co. increased 50 cents, or 1.5 percent, to $34.69 a day after the chain said it would acquire New York-based drugstore Duane Reade for $1.08 billion. The stock advanced despite Standard & Poor’s Ratings Services’ decision to put its credit ratings, including its “A-plus” corporate credit rating, on CreditWatch with negative implications because of the pending deal and its potential dilutive effect on the buyer’s earnings. S&P said any downgrade would be limited to a single notch.
Ratings in the “A” family possess a strong ability to meet financial commitments.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
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The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
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@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty