U.S. retail stocks continued their push into uncharted territory today.
The S&P Retail Index rose 0.4 percent, or 2.48 points, to 562.77 — having hit an all-time high of 564.02 in midday trading. The Dow Jones Industrial Average rose 0.3 percent, or 33.07 points, to 12,878.20.
Among the retail gainers were Aeropostale Inc., up 2.7 percent to $16.88; Kohl’s Corp., 2.6 percent to $50.07; Ann Inc., 2.6 percent to $23.70; V.F. Corp., 2.1 percent to $135.57; J.C. Penney Co. Inc., 2.1 percent to $42.14, and Saks Inc., 1.9 percent to $10.72.
Despite continued worries over a recession in Europe and the region’s debt troubles, markets have been rallying lately with retail stocks repeatedly setting historic highs. Much of the momentum has come from a stronger job market in the U.S., which added nearly 450,000 jobs over the past two month and drove down the unemployment rate.
Consumers have also been taking on more debt. The Federal Reserve said today that consumer credit grew at an annual rate of 9.3 percent in December, with a 4.1 percent rise in revolving credit, such as credit cards, and an 11.8 percent increase in non-revolving debt, such as loans for education or vacations.
Gregory Daco, principal U.S. economist at IHS Global Insight, noted that federal lending was up even in months not typically associated with student loans. “This would tend to indicate higher demand for financing assistance—not a good sign for the economy—as well as looser credit conditions,” he said.
“Despite recent good economic news from the January employment report and business surveys, euphoria should be tempered by still-high unemployment, still-high levels of debt, and still-low household wealth,” Daco said. “Overall, the picture remains one of a slow economic recovery, where consumer spending is growing around 2 percent and credit is used with moderation.”
Wall Street got an assist from Europe today, where bank stocks, including BNP Paribas and Unicredit, were buoyed by the prospects of a Greek bailout deal and led the gains in Paris and Milan.
The CAC 40 in Paris and the FTSE MIB in Milan rose slightly, up 0.2 percent to 3,411.54 and up 0.6 percent to 16,491.71, respectively. But the FTSE 100 in London dipped 0.03 percent to 5,890.26 while the DAX in Frankfurt dropped 0.2 percent to 6,754.20.
The majority of fashion, luxury and retail stocks ended the day down. Among the biggest decliners were Richemont, down 2.5 percent to 53.90 Swiss francs; Aeffe, which fell 5.3 percent to 0.66 euros; Swatch Group, down 3.4 percent to 69.90 Swiss francs, and Hermes, down 2.9 percent to 268.75 euros.
Investors’ negative reaction to Swatch’s full year results, which showed lower-than-expected operating profits, weighed on luxury stocks.
The few fashion stocks that rose included Mulberry, up 0.4 percent to 18.51 pounds, Yoox, up 2.6 percent to 9.50 euros and ASOS, up 3.2 percent to 19.04 pounds.
The pound traded at $1.58 today, while the euro traded at $1.30 and the Swiss franc traded at $1.08.