By  on April 19, 2005

NEW YORK — After three days of consecutive losses, both the S&P 500 and its related retail index rebounded Monday as investors sought safe harbors from the storm.

The S&P 500 gained 0.3 percent to close at 1,145.98, while the S&P Retail Index jumped 1.3 percent to 409.1.

Shares of J.C. Penney Co. Inc., Nordstrom Inc., Saks Inc. and Chico’s FAS were among the standouts.

The Dow Jones Industrial Average, however, closed Monday down 16.3 points, or 0.2 percent, to 10,071.25, which is still above its 52-week low of 9,708.4 reached on Oct. 25, 2004, but well below its 52-week high of 10,984.46 hit on March 7.

“As investors’ sentiment changed from worry about interest rate increases to a slowing economy and just maybe a recession looming on the horizon, the equity market adjusted — quickly,” wrote Paul Nolte, director of investments at Chicago-based Hinsdale Associates, in a Monday note to clients. He was referring to the market’s latest reverse, which began last Wednesday, following a weaker-than-expected retail sales report from the government.

The Commerce Department said on Wednesday that retail sales rose 0.3 percent in March compared with February,  lower than the forecasted 0.8 percent gain. Specifically, sales at retail and accessories stores dropped 1.9 percent to $16.18 billion.

Nolte cited the Conference Board’s March 29 report, which said consumer confidence dropped to a reading of 102.4 in March from 104.4 in February, as an additional source for the recent stock market weakness.

Nolte also noted “deteriorating” trade figures. “We are exporting into even weaker economies,” he wrote.

Nevertheless, Nolte cited consumer goods, along with health care and utilities, as the few sectors suitable to invest in going forward should stocks become more unreliable overall due to the macro environment. “All three have the distinction of providing well above market dividend yields — so we will be getting paid to wait out the storm,” he wrote.

Last week, for example, money within the stock market “flowed out of energy and basic material stocks and into consumer and health care issues,” Nolte said.Yesterday, Penney’s shares added 2.3 percent in New York Stock Exchange trading, closing at $46.52, while shares of Nordstrom rose 1.5 percent to $53.31 and Saks shares closed at $17.86, up 2.2 percent.

Chico’s shares swelled 5.9 percent to $26.28 after the stock was upgraded to overweight from neutral weight by Prudential Equity Group LLC analyst Stacy Pak. Pak, who set a $30 price target for the stock, said in a report that the specialty retailer “should be a core holding and that the weakness the shares experienced over the past week provide an attractive entry point.”

The analyst said the stock could be less sensitive to consumer spending weakness because the typical Chico’s customer has a “high income level and dependable shopping habits.”

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