The Standard and Poor’s Retail Index closed up almost 1.7 percent Wednesday after the Federal Reserve said it was cutting interest rates, but the news didn’t help the Dow Jones Industrial Average, which fell back below the 9,000 level.
This story first appeared in the October 30, 2008 issue of WWD. Subscribe Today.
In the final 10 minutes of trading, the Dow, up more than 200 points during the day, shook off most of its gains, closing down 0.82 percent, or 74.16 points, to 8,990.96. Retail shares, however, jumped 4.62 points to 282.21.
Meeting in Washington, the Federal Open Markets Committee unanimously decided to lower its target for the federal funds rate 50 basis points to 1 percent. This is the latest in a series of moves by the Fed to try to encourage the flow of credit during the economic downturn.
The Fed said that, while “the pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures,” inflation was “expected to moderate in the near term to levels consistent with price stability.”
On the retail side, department store shares soared, with The Bon-Ton Stores Inc. leading the way with a 17.9 percent gain, boosting the stock 29 cents, to $17.90. Shares of J.C. Penney Co. Inc. increased 3.98 percent, closing at $21.17, while shares of Macy’s Inc. were up 6.7 percent, to $11.03. Shares of upscale department store Saks Inc. fell 1.4 percent, to $5.62. Discount giant Wal-Mart Stores Inc. saw its stock dip 0.03 percent to $55.02.
Shares of women’s specialty retailer The Talbots Inc. climbed 18.31 percent, to $10.08, while shares of New York & Company Inc. boasted 17.3 percent gains, closing at $2.71. Shares of teen retailer American Eagle Outfitters Inc. closed up 3.5 percent, to $11.17, as rival Abercrombie & Fitch Co.’s stock fell 1 percent, to $27.61.
Apparel vendors’ results were mixed. Big gainers included True Religion Apparel Inc. and Liz Claiborne Inc., which were up 9.1 percent and 7.6 percent, respectively, to $15.70 and $7.23. Tarrant Apparel Group Inc. and Coach Inc. were among the decliners, with shares down 5.8 percent and 3.9 percent, respectively, to 49 cents and $18.63.