Shares of Wal-Mart Stores Inc. and Sears Holdings Corp. both gained ground today on the strength of first-quarter results, but the market obsessed over troubles in Europe.
As the market settled, Wal-Mart’s stock was up 4.2 percent to $61.67 after the retailer reported its best quarterly comparable-store sales in three years and Sears increased 3.1 percent to $52.42 as asset sales boosted the bottom line.
Overall, though, the S&P Retail Index fell 3.3 percent, or 19.91 points, to 595.21 as the Dow Jones Industrial Average tanked 1.2 percent, or 155.98 points, to 12,442.57.
It was also a dismal day for Europe’s markets, where stocks were dragged down by a spike in Spain’s cost of borrowing, France’s about-face on the European Union’s new fiscal compact, and growing concerns that Greece could quit the common currency.
Milan’s FTSE MIB saw the sharpest decline, closing down 1.5 percent to 13,089.26. The region’s other major markets all fell 1.2 percent with London’s FTSE 100 closing at 5,338.38, while Paris’ CAC ended at 3,011.99 and Frankfurt’s DAX closed at 6,308.96.
Among the biggest decliners was French Connection, which plummeted 24.1 percent to 30 pence after issuing a profit warning earlier in the day. The retailer said group revenues in the 15 weeks to May 17 fell 9.5 percent compared with the same period last year. French Connection also noted, “It appears unlikely that our profit performance for the full year will meet current market expectations.”
The day’s biggest gainers including Brunello Cucinelli, which advanced 1.6 percent to 11.24 euros; Tod’s, which was up 3.4 percent to 83.40 euros; and Yoox, which rocketed 11.7 percent to 11.15 euros as it holds discussions with PPR about forging a possible “commercial” deal.
The euro traded at $1.27 while the pound traded at $1.59. The Swiss franc traded at $1.06.
In a taped interview with the BBC, International Monetary Fund chief Christine Lagarde said the organization was braced for Greece’s exit from the euro.
“We at the IMF have to be technically prepared for anything,” she said. “I’m not suggesting that this is a desirable option. It is within the range of options, and one that we have to look at. But I think what we should look at is the optimal scenario, where the country has the political resolve to fulfill its commitments and stay within the zone.”
Meanwhile, Spain’s cost of borrowing rocketed to 4.37 percent on bonds due to be paid back in January 2015, an increase from 2.89 percent in April. There are also renewed fears that the beleaguered country’s banks could suffer from Greece’s economic problems.
In France, the new finance minister Pierre Moscovici said point blank that the country would not ratify the E.U.’s fiscal pact unless it outlines provisions for growth. Former French prime minister Nicholas Sarkozy was one of the fiscal plan’s architects.