Word of a Senate budget deal propelled U.S. stocks up sharply Wednesday as investors latched on to hopes for an end to the government shutdown and the aversion of a debt-ceiling breach.
Stocks got off to a strong start in morning trading, as word of a deal between Senate Democrats and Republicans first circulated in the morning, and held on to gains throughout the day. The S&P 500 Retailing Industry Group advanced 1.2 percent, or 10.37 points, to 849.98, nearly keep pace with the 1.4 percent gains registered by both the Dow Jones IndustrialAverage and S&P 500, which closed at 15,373.83 and 1,721.54, respectively.
A vote in the Senate is expected this evening with consideration by the House of Representatives, where resistance to a deal had withered, expected shortly thereafter. Affirmative votes would end the nation’s 16-day government shutdown and lift the debt ceiling, avoiding what could have been the first default in the history of the U.S. government.
The standoff in Washington had further complicated a consumer purchasing picture that had grown gloomier before the start of the shutdown. Even with government workers hoping for an end to the furloughs, the task of luring consumers back into stores might not be easy.
Among U.S. retail, fashion and beauty stocks tracked by WWD, gainers outnumbered decliners by about a six-to-one margin, led by Zale Corp., up 10.5 percent to $17.08, and Christopher & Banks Corp., up 4.4 percent to $6.43. Shares of J.C. Penney Co. Inc. picked up 4.2 percent to $7.47 after the retailer late Tuesday denied reports that it had retained bankruptcy counsel. The TJX Cos. Inc., Kohl’s Corp., The Bon-Ton Stores Inc., Dillard’s Inc. and Macy’s Inc. all saw their shares move ahead more than 3 percent as the news from Washington remained hopeful.
The two biggest declines among the WWD sample came from Joe’s Jeans Inc. and The Wet Seal Inc., off 8.5 and 6.8 percent, respectively, to $1.08 and $3.58. Joe’s Jeans late Tuesday reported lower sales and earnings in its third quarter, in large part because of declining same-store sales during the period. Wet Seal lowered third-quarter guidance, projecting a larger loss and weaker same-store sales than originally expected based on weak traffic patterns and more aggressive promotions as a result.
Most European stock markets posted modest gains for the day, although these generally weren’t shared by fashion and luxury issues.
The FTSE MIB in Milan rose the most, with the Italian market up 1.5 percent to 19,275.04, followed by the DAX in Frankfurt, 0.5 percent to 8,846.00 and the FTSE 100 in London, 0.3 percent to 6,571.59.
The CAC 40 in Paris dipped 0.3 percent to 4,243.72.
The euro traded at $1.35, while the pound fetched $1.60 and the Swiss franc equaled $1.10.
Retail and luxury stocks were mostly down, with the day’s biggest fallers including Ferragamo, 3.2 percent to 24.59 euros; Mulberry Group, 6.7 percent to 9.97 pounds; and LVMH Moët Hennessy Louis Vuitton, 4.3 percent to 138.70 euros.
Among the few stocks that gained ground were Yoox.com, which was up 6.9 percent to 24.45 euros; Metro AG, 4.3 percent to 32.94 euros; and Debenhams plc, 1.6 percent to 1.10 pounds.