Stocks fell on Wall Street today as investors tried to sort out a tangled debt debate in Washington.

The S&P 500 Retailing Industry Group declined 1 percent, or 8.11 points, to 839.61, as the Dow Jones Industrial Average, sank 0.9 percent, or 133.25 points, to 15,168.01.

Negotiators in the Democrat-led Senate took a shot at hammering out an accord to raise the debt ceiling and reopen the federal government. But that effort appeared to be at a standstill since any bill will also have to be passed by the Republican-led House — where some lawmakers are pressing President Obama for concessions.

The federal government is set to run out of money on Thursday if lawmakers can’t come to some agreement. And the global economy could take a severe hit if the bedrock U.S. Treasury bond is undermined by a debt default.

While the wrangling weighed on the market as a whole, some retailers were facing a crisis of confidence themselves.

Shares of J.C. Penney Co. Inc. 8.9 percent to $7.17, with 72.7 million shares trading hands, well ahead of the 32.2 million daily average for the past three months. The company, which recently sold stock to boost its liquidity by more than $800 million, now has a market capitalization of $1.58 billion and found itself batting away market rumors that it had hired bankruptcy counsel. “It is false,” said a spokeswoman. “There is no truth to the rumor.”

J.P. Morgan analyst Matthew Boss said in a research note that management had “a clear mindset shift toward long-term viability” but that it’s still uncertain when the company’s sales would hit an “inflection point,” taking a turn for the better.

Coldwater Creek Inc. also had a dramatic move and dropped 25.4 percent to 94 cents after the company said it was exploring its strategic alternatives. Among the other decliners were G-III Apparel Group Ltd., down 4.6 percent to $52.93, and American Apparel Inc., 3.4 percent to $1.15.

In Europe, markets closed higher on still-unfulfilled hopes that the U.S. would reach a debt ceiling resolution.

The CAC 40 in Paris was up 0.7 percent to 4,256.02, as London’s FTSE 100 gained 0.6 percent to 6,549.11 and Milan’s FTSE MIB grew 0.4 percent to 18,999.22. Frankfurt’s DAX advanced 0.9 percent to 8,804.44, as German investor confidence rose for a third month in October.

The pound traded at $1.60 against the dollar, while the euro was worth $1.36.

Retail and luxury stocks were mostly up, with the day’s strongest gainers including Mulberry, up 5.6 percent to 10.69 pounds; Brunello Cucinelli, 2.5 percent to 24.05 euros; and Marks & Spencer, 1.6 percent to 4.84 pounds. LVMH Moët Hennessy Louis Vuitton was flat at 144.85 euros as it reported third-quarter revenues gained 1.7 percent to 7.02 billion euros, or $9.3 billion, and said it remains “confident for 2013” despite an “uncertain” economic environment in Europe.

Prominent among the decliners was Burberry, which fell 8.8 percent to 14.64 pounds after the company said Angela Ahrendts would step down as chief executive officer by mid-2014 to join Apple as senior vice president of retail and online stores. Current chief creative officer Christopher Bailey will replace her as ceo and keep his current title.

In a separate trading statement, Burberry said its first half revenues climbed 16.8 percent to 1.03 billion pounds, or $1.59 billion (converted at average exchange rates for the period), reflecting double-digit gains in all regions, and high-single digit comparable growth in China.

Also losing ground were, down 3.4 percent to 22.88 euros, and Ferragamo, which dropped 1.5 percent to 25.40 euros.

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