Stocks plunged Thursday as markets tumbled on credit and housing concerns — compounding fears of an already shaky foundation for consumer spending and pushing the S&P Retail index to a nine-month low.
The Dow Jones Industrial Average closed down 2.3 percent to 13,473.57 — its biggest drop since February. The New York Stock Exchange fell 2.7 percent to 9,659.36, the S&P 500 lost 2.3 percent to 1,482.66, and the Nasdaq slid 1.8 percent 2,599.34.
The S&P Retail Index followed suit, falling 2.7 percent to 490.02, its lowest mark since Nov. 9. The index is down 2.6 percent to for the year.
Hanesbrands Inc. and Crocs Inc. were among the lone shining stars among retail and consumer stocks after both brands posted second-quarter results. Hanesbrands (see related story on page 15) closed up 12.8 percent to $30.07, while Crocs, which posted results after the market closed, rose 18.1 percent in late trading to $59.70.
"Although people may argue about the reason that today was the day for a major correction, several events occurred within the last several weeks that led to a repricing of risk across the credit and equity markets," said Roy Ophir, a partner and Senior Analyst at Brownstone Asset Management, a New York-based hedge fund that specializes in high-yield corporate debt and distressed securities.
Ophir pointed to Bear Stearns' mid-June announcement of the "impending failure" of an internal hedge fund that speculates on mortgage-backed securities, followed by bond investors' rejection of several large debt issuances late last month. Thursday, Ophir noted that debt financing for two more leveraged buyouts were either postponed or canceled.
"Debt is used by private equity shops to increase their return on investment, much like mortgages are used by individuals to increase the affordability of real estate purchases," Ophir said. "Without the debt necessary to finance these large LBOs, private equity cannot afford to pay as much for those companies — therefore their stock prices trade down."
BB&T Capital Management analyst Eric Tracy noted other macro pressures, including housing and energy prices, continue to weigh on the markets — and are expected to do so for "quite some time.""This pull-off or correction — whatever you call it — is not all that surprising," Tracy said. "The magnitude of a one-day hit certainly causes anyone to take a hard look and question if this is a correction and will we get back to a bull market or is it sustainable?"
At the same time, First Albany Capital analyst Paula Kalandiak said that retail has been a tough sector for some time — even before recent, discouraging data reports.
"But we believe that there are still opportunities to find companies that have weathered the storm better than others," said Kalandiak, who likes consistent performers such as Gymboree and Dress Barn. "We are trying to stay away from retailers showing deteriorating fundamentals."
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)