Retail stocks surged Tuesday after the Federal Reserve reduced its benchmark interest rate by a half point.
In line with the overall market's biggest one-day rally in almost five years, many retail shares climbed more than 6 percent. The top movers included The Bon-Ton Stores Inc., which rose 10.88 percent to close at $25.79; J. Crew Group Inc., up 9.34 percent to $46.47, and Cache Inc., climbing 8.99 percent to $17.70.
Aéropostale Inc. jumped 8.82 percent to $20.60 and Saks Inc. rose 8.57 percent to $17.10. Among other top gainers were: Macy's Inc., up 8.31 percent to $32.44; J.C. Penney Co. Inc., with an increase of 7.42 percent to $68.05; AnnTaylor Stores Corp., up 7.48 percent to $34.35, and Kohl's Corp., which jumped 6.66 percent to $59.61.
Seeking to stabilize the economy amid a deepening housing slowdown and credit squeeze, the central bank opted for the half-point cut in the interest rate that banks charge each other for overnight loans — to 4.75 percent from 5.25 percent — rather than a reduction of a quarter of a percentage point. It was the first interest rate decrease in four years.
The aggressive move, which could lower borrowing costs for consumers, was coupled with a promise by the Fed to act as needed to prevent mortgage default losses and possible recession.
The Dow Jones Industrial Average soared 2.51 percent, or 335.97 points, to 13,739.39, the S&P Retail Index climbed 4.76 percent, or 22.68 points, to 499.03 and the Nasdaq was up 2.7 percent, or 70 points, to 2,651.66.
Meanwhile, August wholesale prices on U.S.-made women's and girls' apparel inched up a seasonally adjusted 0.1 percent compared with July and were up 0.8 percent from a year earlier, according to the Labor Department's Producer Price Index released Tuesday.
Within the category, knit shirt wholesale prices jumped 3.9 percent compared with the year-ago period. Dress prices slid 2 percent and underwear was down 2.6 percent.
Since more than 90 percent of the apparel sold in the U.S. is made abroad, price fluctuations among U.S. producers are not indicative of broader trends in the market.
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