Retail stocks came off of recent highs Tuesday, slumping 0.6 percent as Federal Reserve chairman Ben Bernanke said the economy was improving but had a long way to go.
Despite recent signs of stability in spending, Bernanke said the consumer still poses a risk to the recovery.
The S&P Retail Index dipped 2.08 points to 340.16 — retreating from its best close of the year on Monday, when the index ended at 342.24, and ending a streak of six consecutive days of gains.
Among the retailers losing ground were Caché Inc., down 9.9 percent to $3.65 after reporting a 59.9 percent drop in second-quarter profits Monday; The Talbots Inc., 5.2 percent to $4.04; AnnTaylor Stores Corp., 4.3 percent to $8.40; Dillard’s Inc., 4 percent to $8.20, and Macy’s Inc., 2.4 percent to $12.41.
The Dow Jones Industrial Average rose 0.8 percent, or 67.79 points, for the day to 8,915.94.
Bernanke, in his semiannual update on monetary policy to House lawmakers, said credit was still hard to come by and financial conditions were stressed.
But he noted there had been notable improvements over the past few months, including some recovery in the corporate bond market. And the central bank now has less than $600 billion in credit extended to banks and other market participants, a marked decline from the $1.5 trillion for which the Fed was on the hook at the end of last year.
“Consumer spending has been relatively stable so far this year, and the decline in housing activity appears to have moderated,” he said.
But the job market — with unemployment at 9.5 percent — remains a wild card.
“Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending,” Bernanke said. “The possibility that the recent stabilization in household spending will prove transient is an important downside risk to the [economic] outlook.”
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