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 personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews