By  on April 30, 2009

Modest signs of economic stability picked up Wall Street on Wednesday, but retail shares missed the rally and slid 0.4 percent.

The S&P Retail Index declined 1.28 points to 333.46 as the Dow Jones Industrial Average advanced 2.1 percent, or 168.78 points, to 8,185.73 points.

“Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth and tight credit,” read a statement from the Federal Reserve, led by chairman Ben Bernanke.

The Fed maintained its federal funds interest rate target range of 0 to 0.25 percent and said it expects to keep the benchmark rate low for an “extended period.”

The U.S. economy shrank at an annual rate of 6.1 percent in the first quarter, according to an advance reading of the nation’s gross domestic product from the Commerce Department Wednesday. A final tally for the quarter won’t be completed until the end of June. The fall came on top of the 6.3 percent drop in GDP during the fourth quarter. However, first-quarter personal consumption expenditures rose 2.2 percent after a 4.3 percent drop in the fourth quarter.

There are also other signs that consumers are finding their feet again, such as Tuesday’s word from the Conference Board that its Consumer Confidence Index jumped to 39.2 in April from 26.9 in March.

The slowdown has been a boon for Wal-Mart, which is picking up new, more affluent customers.

“It doesn’t matter how you slice it, we are growing a lot faster than the market,” said Eduardo Castro-Wright, vice chairman of Wal-Mart Stores Inc., at a Barclays Capital retail conference.

Seventeen percent of Wal-Mart’s foot traffic in February came from new customers, who spent 40 percent more than existing Wal-Mart customers in average ticket sales, he said. Just over half of the new households have an estimated annual income of more than $50,000.

“More often than not, those customers are shopping across the aisle,” he said, noting they are buying things that they might not have considered buying at Wal-Mart before.

Shares of Wal-Mart, which is a Dow component stock, rose 4.1 percent to $50.45. Other retail gainers for the day included Destination Maternity Corp., up 9.8 percent to $12.92; Saks Inc., 9.3 percent to $4.94; Urban Outfitters Inc., 7 percent to $18.36, and J. Crew Group, 5.4 percent to $15.72.

To access this article, click here to subscribe or to log in.

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus