By and  on July 13, 2010

A strong start to the second-quarter earnings season helped lift the S&P Retail Index 2.5 percent on Tuesday and put it over the 400 mark for the first time in two weeks.

The index climbed 9.76 points to 404.17 and moved as high as 405.95. The percentage gain was more than a full point better than the 1.4 percent advance of the Dow Jones Industrial Average, which logged its sixth consecutive positive session and closed at 10,363.02. The S&P 500 was up 1.5 percent to 1,095.34 and the Nasdaq Composite rose 2 percent to 2,242.03.

The retail index fell below 400 on June 29. But, helped by strong quarterly results from Alcoa and CSX, stocks began moving higher at the market’s opening and maintained an almost uninterrupted upward trajectory all day.

After Tuesday’s performance, retail stocks remained 19.2 percent below their 52-week high of 499.91, reached April 26, but 6.4 percent above the 2010 low of 379.74 on July 1.

“The rally in equities should last 30 to 50 days, which is normal after a significant sell-off,” said Richard Hastings, macro and consumer strategist at Global Hunter Securities.

As for the long-term outlook, Hastings said: “Domestic economic problems are starting to weigh down on companies. The S&P Retail Index is back to where it was in 2004.…We don’t believe that retail stocks, generally speaking, would recover and retrace anything close to their April 2010 highs.”

James Goldstein, analyst at CreditSights, said, “The outlook for the remainder of the year will still be shadowed by an unfortunate labor market, but overall progress in the industry has provided for a small amount of optimism and the gains in the S&P Retail Index.”

The day was especially strong for many specialty retailers. Coldwater Creek Inc. was up 8.6 percent to $3.90; Zale Corp., 8.6 percent to $1.77; The Talbots Inc., 8 percent to $11.38, and New York & Co. Inc., 7 percent to $2.46. Among vendors, Kenneth Cole Productions Inc. rose 9.3 percent to $13.13, and Revlon Inc., 7.5 percent to $12.68.

CEO’s Confidence Holds: The Conference Board’s quarterly Measure of CEO Confidence held steady during the second quarter, landing at 62, unchanged from the first quarter and down 2 points from the fourth quarter of 2009. A reading of 50 or more indicates more positive than negative responses.

Target Upgraded: Moody’s Investors Service Tuesday changed the ratings outlook for Target Corp. to “stable” from “negative,” based on the retailer’s improved operations and the ratings agency’s belief that problems with its credit operations are “largely behind the company.”

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