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Retail stocks fell short in their bid for a 10th consecutive day of gains Tuesday after the Federal Reserve Board’s Open Market Committee issued a lukewarm statement about the economy that included warnings about deflation.
This story first appeared in the September 22, 2010 issue of WWD. Subscribe Today.
The S&P Retail Index spent some of the day in positive territory but finished down 1.70 points, or 0.4 percent, at 445.26, its first losing session since Sept. 7. An up day would have been the 10th consecutive winner for the index and would have tied a streak that dates back to January 2004, less than two years after its recalibration.
Although the Fed’s statement appeared to pour cold water on stocks Tuesday afternoon, the Dow Jones Industrial Average, unlike the other major indices, did manage to advance, rising 7.41 points, or 0.1 percent, to 10,761.03.
The Fed kept the federal funds rate at its current level of zero to 0.25 percent and stated that the weakness of the economic recovery is “likely to warrant exceptionally low levels…for an extended period.” However, it noted that inflation was “likely to remain subdued for some time before rising to levels the committee considers consistent with its mandate” to promote employment and price stability. This added to concerns that retailers, including those in the apparel sector, could be hamstrung by a lack of price elasticity going forward.
The Fed also said it was “prepared to provide additional accommodation if needed to support the economic recovery” and return inflation to more desirable levels.
Among fashion’s gainers on Wednesday was Frederick’s of Hollywood Group Inc., which recently revealed its intention to exit its wholesale business, up 5.5 percent to 96 cents; Liz Claiborne Inc., up 2.1 percent to $5.72, and Express Inc., up 1.6 percent to $15.10. On the other side of the ledger, The Buckle Inc. shed 8.4 percent, to $26.69, for the biggest decline among the 171 equities tracked by WWD. Other notable declines came from apparel specialty stores, including J. Crew Group Inc., off 4 percent to $33.10; Christopher & Banks Corp., 3.9 percent to $7.47, and Limited Brands Inc., 3.4 percent to $26.48.