U.S. stocks rallied in the late-afternoon session with the Dow Jones Industrial Average gaining over 500 points.
The U.S. stock market is making another attempt to recover from Monday’s losses, and it opened higher across the board. At the opening bell, the Dow Jones Industrial Index rose 356 points to 16,016 while the S&P 500 is higher by 42 points to 1,909 and the Nasdaq is jumping 108 points to 4,611. Retail stocks opened across the board with gains of 1 to 3 percent – and higher in some cases.
By midday, trading was choppy and the Dow was up 200 points. But it jumped up again, and was holding steady with a 340-point gain before rising 500 points to 16,194. The S&P 500 was up 2.1 percent to 1,907 while the S&P 500 Retailing Industry Group index was holding a 2.4 percent gain to 1,153.
Earlier in the day, stocks in Asia closed down sharply.
In Europe, markets all closed down Wednesday evening, as volatility in China’s markets continued to weigh on the indices. The FTSE 100 in London finished down 1.7 percent to 5,979, followed by the CAC 40 in Paris, which lost 1.4 percent to 4,501. The DAX in Frankfurt slipped 1.3 percent to 9,997 and the FTSE MIB in Milan fell 0.8 percent to 21,473.
In London, mining firms Fresnillo and Randgold Resources were among the FTSE 100’s biggest fallers, down 7 percent to 5.94 pounds and 4.6 percent to 38.17 pounds respectively, over investors’ concerns for Chinese demand for commodities.
Fashion, luxury and retail stocks had more of an uneven day.
Those that fell the most numbered Hennes & Mauritz, 3.4 percent to 322.70 Swedish kronor; Burberry, 3.2 percent to 13.47 pounds; L’Oréal, 2.9 percent to 148.45 euros and Richemont, 2.3 percent to 70.15 Swiss francs.
The few risers included Yoox Group, 0.2 percent to 26.97 euros; Luxottica, 1.7 percent to 60.25 euros and Jimmy Choo, 1.5 percent to 1.68 pounds. At 7.30 p.m. Central European Time, the pound traded for $1.57, while the euro went for $1.15. The Swiss franc changed hands for $1.06 and the Swedish krona for 12 cents.
In the U.S., investors remained leery of the early positive move since the gains during Tuesday’s market were erased at the end of the day. However, in the retail and fashion apparel segment, investors seemed to brush aside worries over China and focused on quarterly results of key companies instead. Abercrombie & Fitch Co., Chico’s FAS and Express all opened much higher after beating earnings estimates. It was as if Wall Street suddenly remembered that the U.S. economy is driven by consumer spending.
Teen retailer A&F rose 14 percent to $19.81 after reporting earnings that beat analysts’ expectations. The company was helped by better sales at Hollister and abercrombie. Earnings per share were 17 cents, way better than the estimated 12 cents a share. On a negative note, quarterly revenues fell to $817.8 million from $890.6 million last year, but analysts only expected $811.3 million. By midday, the stock was up 9.6 percent to $18.92.
Chico’s stock took off in early trading, moving higher by 7 percent to $14.80 after the women’s apparel chain beat analysts’ estimates on second-quarter earnings. Chico’s reported earnings in the second quarter of 25 cents per share, a 25 percent increase over last year and easily beating research firm Zacks’ estimate of 22 cents per share. Revenues of $680.4 million also beat Zacks’ estimate of $675 million and were better than last year’s $671.1 million.
Chico’s also reported that it was selling the Boston Proper direct-to-consumer business and closing those stores. So far, this has cost Chico’s $16.2 million in restructuring charges. By midday, the stock was up 3.6 percent to $14.33.
Express stock jumped 14 percent out of the gate to $19.30 after it, too, beat analysts’ expectations for the second quarter. Express profits tripled as sales grew and the company was able to be less promotional. Express reported earnings of 25 cents a share up from 8 cents a share last year and better than the estimate of 15 cents. The company had forecast earnings in the range of 13 to 16 cents per share. The stock held onto its gain through to the afternoon session.
Other notable midday gainers included Amazon.com Inc., which was up 4.1 percent to $485.68, and Guess Inc. with a 4.3 percent increase to $20.70. Perry Ellis International Inc. was trading up 4 percent to $24.28.