By and and  on October 17, 2008

The stock market swung wildly on Thursday, but this time it was the bulls who took control in the session’s final hour.

Mixed economic messages sent retail stocks and all major indices on wild gyrations, with better-than-expected data about inflation and unemployment claims and another drop in the price of crude oil eventually prevailing over growing fears of a brutal holiday season and more evidence of a deep and sustained recession.

But when the smoke cleared, the Standard & Poor’s Retail Index ended the day close to its high for the session, ahead 11.26 points, or 4.3 percent, at 274.27. It started the day with a precipitous drop, down 5.5 percent, but gathered strength in the last 90 minutes of trading.

The Dow Jones Industrial Average followed a similar trajectory. It ended the day ahead 401.35 points, or 4.7 percent, at 8,979.26, but was down 4.4 percent at one point in the morning. The index’s range for the day was more than 800 points, including a 360-point surge in the final hour, and featured a brief visit above the 9,000 mark.

No stock demonstrated the market’s volatility more than Macy’s Inc., which began the day with an 11.7 percent swoon, hitting a new 52-week low of $7.65, before rallying to end the session up $1.39, or 16.1 percent, at $10.05. The stock dropped 17.5 percent on Wednesday after its outlook was reduced to “negative” from “stable” by Moody’s Investors Service. By contrast, its high-water mark for the past year, $33.76, was reached last Oct. 29.

Deborah Weinswig, broadlines equity analyst at Citi, noted Macy’s has an advantage in its dependence on outside vendors as well as private label.

“Most of what they sell is provided by their vendors, so they’re not on the hook for it,” she said. “The issue is, what if something happens on the vendor side? To help offset that risk, they have a very strong private label business, which is already outpacing the growth in national brands. For that reason, I think that Macy’s is in a much better position than a specialty retailer that is 100 percent vertically integrated, as they cannot ask anybody for vendor support. Also, Macy’s is most likely to pick up share from continued weakness at the smaller regional department stores.”

Companies such as Saks and Nordstrom are also being pressured, she said. Saks, which derives about 20 percent of its business from the finance-driven New York market, saw its shares close up 7 cents, or 1.3 percent, at $5.40. Shares of Nordstrom, which owns its credit card business, closed up 10 cents, or 0.6 percent, at $16.64.

The exchanges between retailers and their top vendors could be particularly strained in the coming months as stores cut prices to move goods and try to get their vendors to help them make quarterly numbers.

“People have made a lot of purchase commitments for inventory,” Antony Karabus, chief executive officer of Karabus Management, said. “People are going to be discounting long before Christmas this year.”

Some brands might prove to be rather willing to work with stores and pay markdown money to help them get through the lean times, he noted.

“The last thing those vendors want is for their product to be sitting at 75 percent off,” Karabus said. “They might as well be helping the retailers take the first markdown early and get the goods out.”

Other stocks benefiting from the late upswing Thursday included Stein Mart Inc., up 18.1 percent to $2.48; G-III Apparel Group Ltd., up 12.4 percent to $15.46, and Warnaco Group Inc., up 11.7 percent to $31.13. Dillard’s Inc. and Charming Shoppes Inc. were two of the few retailers to drop off, declining 4.5 percent and 2.7 percent, respectively, to $6.94 and $1.79.

But while Wall Street ended on gains, overseas exchanges endured a tough day as they reacted to Wednesday’s 733-point drop in the Dow.

In Tokyo, the Nikkei 225 posted its second highest decline ever with an 11.4 percent, or 1,089.02 point, drop to 8,458.45 after Wall Street’s plunge on Wednesday and a strengthening of the yen. Traders in Hong Kong pushed shares down a lesser 4.8 percent, according to the Hang Seng Index, which fell 767.78 points to 15,230.52.

On the London Stock Exchange, the FTSE 100 sank 5.4 percent, or 218.20 points, to 3,861.39. Decliners included Burberry Group plc, down 7.9 percent to 260.25 pence; Marks and Spencer Group plc, 5.4 percent to 210 pence, and French Connection, 4.4 percent to 66 pence.

In Paris, the CAC 40 shrank 5.9 percent, or 200.07 points, to 3,181.

Other decliners across Europe included, PPR, down 9.9 percent; Compagnie Financière Richemont, 6.6 percent; Tod’s, 5.2 percent, and Inditex 4.4 percent.

Back in the U.S., inflationary trends appeared to ease for many consumer products in September. Prices for all goods and services were flat for the month, after falling 0.1 percent in August and rising 0.8 percent in July, the U.S. Labor Department said Thursday in its Consumer Price Index. Prices in September were 4.9 percent higher than a year earlier. The so-called core prices, which exclude volatile food and energy sectors, rose 0.1 percent.

Retail prices of women’s apparel fell a seasonally adjusted 0.3 percent in September, despite fears inflationary trends would prevail.

Prices for women’s apparel had been rising in recent months, increasing 1.9 percent in August and 2.1 percent in July after staying flat in June. Compared with September 2007, women’s apparel prices rose 0.3 percent.

Apparel prices as a whole dropped 0.1 percent in September and rose 1.4 percent compared to the prior year.

Overall, the September price fluctuations were fairly typical, said Jessica Penvose, an economist at the Department of Labor Statistics, although the increases were somewhat less dramatic than in previous years. Penvose noted that more fall and winter merchandise hit stores during August this year, which could have shifted some of the price increases out of September and into the previous month.

“Consumer price inflation has gone dormant, as the recent abrupt slowdown in world economic growth has led to sharp declines in energy costs, while weak domestic demand is putting downward pressure on retail prices in many key markets,” said Brian Bethune, chief U.S. economist at Global Insight.

The declining inflationary threat will give the Federal Reserve more leeway to continue reducing interest rates to address the impending recession, Bethune said.

Within the women’s apparel category, price levels fluctuated. Outerwear increased 2.8 percent in September and was up 2.7 percent year-over-year. Dresses increased 0.9 percent for the month and 0.8 percent against prices a year ago. The broad category of underwear, nightwear, sportswear and accessories spiked 2.2 percent for the month and 0.6 percent against the same time last year.

Prices for women’s suits and separates fell 1.5 percent in September and 0.2 percent compared with last year. Girls’ apparel fell 0.4 percent for the month, but increased 3.8 percent against September 2007.

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