Federal Reserve chairman Ben S. Bernanke boosted markets early Wednesday with relatively kind words on the consumer and economy, but the run didn’t last, and retail stocks ended flat as the Dow Jones Industrial Average slipped back below 10,000 and ended the day with a loss.
The here-and-gone-again rally, which had retail issues up as much as 2.2 percent midday, demonstrated the market volatility that’s developed amid a slow U.S. recovery and Europe’s debt troubles. Investors, who abhor uncertainty above all else, remain on edge.
“It’s total, absolute nervousness,” said James Smith, chief economist for Parsec Financial Management, of the late-day decline.
Smith said the U.S. recovery was still on track but that the bounce back was only about half what it historically should be given the seriousness of the recession. He also said there was a 35 percent chance of another U.S. recession over the next year, while Europe faced a 70 percent chance.
Concerns the debt troubles that began in Greece could spread beyond Europe have kept investors from celebrating signs of modest strengthening in the U.S., including a positive take on April and May from the Fed’s Beige Book report.
Bernanke told House lawmakers the economy would expand by about 3.5 percent this year and continue to pick up speed in 2011. But he also warned the job market would remain weak.
“This pace of growth, were it to be realized, would probably be associated with only a slow reduction in the unemployment rate over time,” Bernanke said in testimony. “Consumer spending is likely to increase at a moderate pace going forward, supported by a gradual pickup in employment and income, greater consumer confidence and some improvement in credit conditions.”
The S&P Retail Index closed at 422.25, a gain of just 0.11 points. The Dow Jones Industrial Average slid 0.4 percent, or 40.73 points, to 9,899.25. Blue-chip stocks traded as high as 10,065.14 Wednesday.
Retail gainers included Tiffany & Co., up 3 percent to $42.43; Coach Inc., 2.4 percent to $40.81; J. Crew Group, 1.9 percent to $41.18, and Sears Holdings Corp., 1.7 percent to $80.38.
European investors pushed the DAX up 2 percent to 5,984.75 in Frankfurt, the CAC 40 ahead 2 percent to 3,446.77 in Paris and the FTSE 100 up 1.2 percent to 5,085.86 in London. In Asia, the Hang Seng Index rose 0.7 percent to 19,621.24 in Hong Kong and the Nikkei 225 slipped 1 percent to 9,439.13 in Tokyo.
Consumer spending improved in April and May, according to the Fed’s Beige Book, released Wednesday afternoon.
According to the anecdotal report, retail sales improved in most parts of the country during the two-month period compared with the previous report and in many regions compared with a year earlier.
Spring and summer apparel sold well in New York, Boston, Dallas, Philadelphia, St. Louis and Kansas City, Mo. Sales of larger-ticket items continued to lag in most cities and regions, according to the report.
“It’s definitely a better year than last,” one Philadelphia retailer said, “and we are selectively expanding.”
Some retailers in Boston said sales were “volatile” but strong in categories such as apparel and household goods.
Clothing, jewelry and cosmetic sales in New York were also strong, retailers reported. New York City outperformed other areas within the broader New York region tracked by Beige Book.
Vigorous demand in Dallas for apparel and accessories wasn’t enough to increase department store sales, which were flat in the region, according to the Beige Book. Overall, retail sales were down in the area but that was mostly due to Easter sales that were pulled into March by the early holiday.
“I was touched by the fact that she lost her father, really before his time, and it was a real shock. She had two young children, she was married and she was expecting that she would have her own life for a good 25 years,” said Claire Foy about playing a young Queen Elizabeth in Netflix’s The Crown. Styled by @mayteallende 📸@jgreenery #emmys2017 #wwdeyeu
“Truth and lies have become a real interesting theme, more than ever, lately,” Emmy nominee Laura Dern told WWD. "It’s a very interesting time to use our voice." Styled by @cristinaehrlich, 📸 @shayanhathaway #wwdeye #emmys2017
“It transcends the genre that is you think of a sci-fi show — you don’t expect it to be so profound or emotionally riveting,” Evan Rachel Wood told WWD of her Emmy nominated role in Westworld. styled by @samanthamcmillen_stylist 📸 @emmanmontalvan #emmys2017 #wwdeye