Retail shares gained momentum on Thursday after commodities future prices declined, giving investors hope consumers might step up their pace of spending as a result of lower energy and food costs.
This story first appeared in the March 21, 2008 issue of WWD. Subscribe Today.
The Dow Jones Industrial Average closed up 261.7 points to 12,361.32, while the broader S&P 500 grew 2.4 percent to 1,329.66. The S&P Retail Index surged 4.9 percent to 395.77.
Notable gainers included J.C. Penney Co. Inc., which rose 8 percent to $42.12; Kohl’s Corp., up 6.4 percent to $45.55; Macy’s Inc., which increased 7 percent to $24.85; Sears Holdings Corp., up nearly 7 percent to $103.87, and Saks Inc., which jumped 5.4 percent to end the day at $12.83.
One stock that saw heavy trading volume was CIT Group Inc., which provides financing to many companies in the retail and apparel sectors through its commercial lending group.
Shares of CIT fell 17.3 percent to close at $9.63 in trading on the New York Stock Exchange. Over 77.6 million shares of CIT traded, compared with a three-month average volume of nearly 6.2 million shares.
CIT said Thursday it was drawing upon $7.3 billion in bank financing to fund operations and might sell some of its assets.
“Our decision today is a result of the protracted disruption in the capital markets,” said Jeffrey Peek, CIT’s chairman and chief executive officer. “It provides us with added flexibility and ensures that our clients have the financing they need to operate and grow their businesses successfully.”
“The bottom line is there’s obviously less credit,” said William Detwiler, partner at Watch Hill Partners, a boutique investment bank and advisory firm. “You probably will be able to get a new credit facility, it will probably just be at higher prices.”