Selling picked up steam midday as the Dow Jones Average tumbled 223 points to 16,091. The S&P 500 slid 34 points to 1,897 and the Nasdaq declined almost 2 percent or 92 points to trade near 4,593.
Retail and apparel brand names were getting hit particularly hard even as consumer spending rose 0.4 percent in August. The sector might be getting hit because while holiday shopping is forecast to go up an estimated 3.5 percent, this is still lower than last year’s 5.2 percent increase. Several retailers that are already struggling were dropping over 5 percent including Aeropostale, American Apparel and Pacific Sunwear. DSW continued to sell after getting downgraded by B. Riley. Its stock fell 6 percent to trade at $25.21. Skechers fell over 5 percent to trade at $131.62, Burlington Stores declined 6 percent to $48.04 and Abercrombie & Fitch lost 5 percent to trade at $20.85.
J.C. Penney was upgraded to Buy from Neutral by Sterne Agee and given a $13 target price. More and more analysts are beginning to believe in the company’s turnaround plan and the stock is up 23 percent for the past six months. Today’s upgrade has pushed the stock up another 2 percent to trade at $9.63.
American Apparel said Friday that it received a delisting notice from the New York Stock Exchange on September 23. The NYSE said that American Apparel had suffered such huge losses that it was questionable whether the company could continue operations. The notice says American Apparel must submit a plan of compliance to the exchange by October 9. It also sounds like American Apparel hasn’t been paying its listing fees. The exchange said it has until November 7 to pay its outstanding fees. For its part, American Apparel said there was no assurance it could address the exchange’s concerns. The stock dropped another 2 percent this morning to 15 cents.
Walker and Company brands said it raised $24 million in funding and signed a deal with Target to sell its flagship product, Bevel. The company specializes in products for people of color and is backed by several venture capital companies out of Silicon Valley. The company has also gotten support from celebrities like Magic Johnson, John Legend and actor King Bach.
Problems in the commodities market pulled down prices in global stock markets. Concerns about China’s economic health after an economic report that said industrial profits fell 8.8 percent in August were dragging down mining stocks worldwide.
Glencore, a major commodities company in London, plunged 30 percent in trading as it began dumping various mining holdings. The big worry about Glencore is that it could set off a cascade effect only equivalent to the failure of Lehman Brothers. Glencore worries dragged down the European indices.
Hong Kong was closed for the Mid-Autumn Festival and Shanghai was down most of the day, but managed to close up by 0.3 percent.