Wall Street retreated Monday, pushing retail stocks down 0.8 percent after Standard and Poor’s cut its outlook on U.S. debt, underscoring the stakes in Washington’s debate on how to cut the nation’s looming budget deficits.
The S&P Retail Index slipped 4.33 points to 524.06 as the Dow Jones Industrial Average ended down 1.1 percent, or 140.24 points, to 12,201.59, having recovered from a nearly 250-point drop.
Although S&P said the U.S. economy was highly diversified and flexible, buttressed by the dollar’s strength as a global currency, the rating agency cut the outlook on its “AAA” credit rating to negative from stable.
“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” said S&P analyst Nikola Swann. The rating agency sees a one-in-three chance that it will lower its rating on the U.S. within two years.
From 2003 to 2008, the U.S. government’s deficit ranged from 2 percent to 5 percent of gross domestic product. But that ballooned to more than 11 percent of GDP in 2009 and has yet to recover, S&P said.
President Obama and House Republicans have laid out competing plans to lower the deficit.
“The market has been generally vulnerable to a correction,” said Paul Nolte, managing director at investment firm Dearborn Partners in Chicago. “We’re just kind of hanging with what we have at this point and seeing how things shake out.”
Nolted described the outlook for retail stocks as “OK” with money moving from luxe retailers toward stores at the lower end of the price spectrum.
Among the decliners Monday were The Bon-Ton Stores Inc., down 3.4 percent to $13.83; Saks Inc., 3 percent to $11.49, and Gap Inc., 3 percent to $21.79.
Shares of Sears Holdings Corp. inched down 0.1 percent to $78.42. Moody’s Investors Service cut its outlook on Sears’ “Ba2” corporate family credit rating to stable from positive, reflecting the retailer’s “moderating revenues and narrowing profit margins over the second half of 2010.”
Bucking the general trend, American Apparel Inc.’s stock rose 8.1 percent to $1.03 as the company searched for capital or a deal with lenders to stay afloat. The company has to show that it can continue as a going concern by April 30 or run afoul of its credit agreements.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty