By and  on October 11, 2010

Retail shares resumed their winning ways last week as the S&P Retail Index registered a 1.7 percent advance following a decline in the prior week.

A 0.6 percent advance on Friday left the S&P Retail Index at 463.46, fully 12.7 percent ahead in 2010, more than twice the growth rate of the major U.S. indices.

Retail shares were aided by the better-than-expected performance of stores reporting their comparable-store sales results on Thursday, as well as news on Friday that activist investor William Ackman had snatched up a 16.5 percent stake in J.C. Penney Co. and Vornado Realty Trust a 9.9 percent stake.

Meanwhile, the Dow Jones Industrial Average on Friday enjoyed its first close above the 11,000 mark since before the Flash Crash of May 6, as a lackluster jobs report elevated investors’ confidence that the Federal Reserve would act to stimulate the economy when it meets next month.

The Dow finished the day at 11,006.48, up 0.5 percent for the day, 1.6 percent for the week and 5.6 percent for the year.

The Labor Department said Friday that employers cut 95,000 jobs in September, driven by the elimination of temporary census jobs and reductions in state and local government payrolls. Private sector employment increased for the ninth straight month, rising by 64,000 jobs.

“The report shows the economy crawling forward,” said Nigel Gault, chief U.S. economist for IHS Global Insight.

Although job cuts were higher than expected, the unemployment rate remained unchanged at 9.6 percent.

Specialty retailers added 2,500 jobs to employ 1.39 million in September, as department stores eliminated 2,100 positions to employ 1.49 million. General merchandise stores, which include department stores, added 1,300 positions to employ 2.95 million.

“While conditions have improved and we are in an economic recovery, the fact is that the level of activity remains well under where it peaked prior to the most severe episode of the recession,” said John Lonski, chief economist with Moody’s Investor Services. “We’re not all the way back.”

Among the 171 public companies tracked by WWD, 135 saw their stock values increase last week, versus 33 experiencing declines and three that were flat.

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