WASHINGTON — Retail stocks hit an all-time high Wednesday as Federal Reserve chairman Ben Bernanke reassured investors that the economy is in a sustainable, though moderate, recovery.
This story first appeared in the April 28, 2011 issue of WWD. Subscribe Today.
Bernanke, who took to the podium for the Fed’s first press conference, pointed to tame long-term inflation and an improving labor market, and said soaring commodity prices should stabilize in the medium term.
The S&P Retail Index traded as high as 543.60 in the afternoon, well above the previous high-water mark of 538.50 set in February 2007. The index, which goes back to 2002, closed up 1.9 percent, or 9.86 points, to 542.72.
The Dow Jones Industrial Average gained 0.8 percent, or 95.59 points, to 12,690.96.
Retailer gainers included Tiffany & Co., up 3.1 percent to $68.75; Sears Holdings Corp., 2.9 percent to $87.02, and Guess Inc., 1.3 percent to $41.78.
The Federal Open Market Committee, completing a two-day policy meeting, issued a statement before the press conference and said it would end its $600 billion bond purchasing program in June based on stronger economic fundamentals.
Bernanke said the program has not raised long-term inflation, although he acknowledged that short-term inflation has risen due to spiraling oil and commodity prices. The Fed also said it would keep a key interest rate low, the target federal funds rate, in the zero-to-0.25-percent range, where it has remained since 2008.
Bernanke said improvements in the labor market, with the unemployment rate falling to 8.8 percent from 10 percent in the first quarter indicate that “we will likely see continued improvement and more job creation going forward.”
Although rising commodity prices have fueled inflation in the short term, Bernanke said the committee projects that inflation will moderate in the medium term at 2 percent or a “bit less.”