Continued anxiety about the economy, tempered by news of a new mortgage relief package and signs of some renewed life in stores, led stocks to a modest decline on Wednesday.
This story first appeared in the February 19, 2009 issue of WWD. Subscribe Today.
After a lively bounce in the morning, the S&P Retail Index finished the trading day down 1.53 points, or 0.6 percent, at 250.01, a vast improvement over Tuesday’s 3.8 percent decline. The major indices finished the day not far from where they started it, with the Dow Jones Industrial Average up less than 0.1 percent at 7,555.63 and the S&P 500 and Nasdaq Composite off 0.1 and 0.2 percent, respectively.
The Talbots Inc. and Coldwater Creek Inc. came back from respective falls of 27.8 and 22.9 percent Tuesday with pickups of 5.6 and 4.7 percent to close at $2.27 and $2.23. However, another hard-pressed store, large-size specialist Charming Shoppes Inc., suffered the largest decline of all stocks tracked by WWD, closing at 85 cents, down 13.3 percent.
Fossil Inc. and Perry Ellis International Inc. qualified for the best performers’ list for the second day in a row, finishing ahead 8.5 percent at $13.61 and up 7.7 percent at $5.17, respectively.
Even with President Obama’s signing of the $787 billion stimulus package into law and disclosure of a new plan to stabilize the U.S. housing market, gloom and uncertainty hung over the financial sector.
In minutes of its two-day meeting released Wednesday, the Federal Reserve’s Open Market Committee painted a moribund picture of the economy, including a predicted rise in 2009 unemployment to between 8.5 and 8.8 percent, from December’s 7.2 percent level, and general economic contraction of 0.5 to 1.3 percent, followed by limited growth of 2.5 to 3.3 percent in 2010.
“The staff again expected that unemployment would rise substantially through the beginning of 2010 before edging down over the remainder of the year,” read the notes from the meeting.
However, Todd Slater, analyst at Lazard Capital Markets, said he was hearing of “some acceleration” at retail in the past week, which “may have resulted from pent-up demand and the timing of Valentine’s Day-President’s Day.” He pointed out that Wal-Mart Stores Inc. reported a “good start” to February and positive recent showings at Urban Outfitters Inc.’s Anthropologie division, Limited Brands Inc.’s Victoria’s Secret stores and American Apparel Inc.
Meanwhile, in Mesa, Ariz., Obama revealed a plan to extend help to up to nine million homeowners and infuse the mortgage market with $75 billion. The housing plan focuses on helping responsible borrowers refinance at lower mortgage rates, assisting homeowners who are struggling with their payments stay current and reducing the rate of foreclosures. The plan would help four million to five million homeowners whose home values dropped through no fault of their own to refinance. The infusion would aid an additional three million to four million at-risk homeowners struggling because of the recession. Additionally, the plan would double the Treasury Department’s commitment to absorb losses at Fannie Mae and Freddie Mac, which the government took over last year, to $200 billion.