Retail and fashion stocks plummeted 4 percent as the reality of a weakening Chinese economy sunk in, spooking investors from Shanghai to Paris to New York.
China started to devalue its currency, the yuan, last week — a move that makes it easier for local companies to export their manufactured goods, but more expensive for brands from outside to sell there. Chinese authorities hope the currency shift will, among other things, help prop up growth in the already flagging economy that was once the engine for global growth.
The S&P 500 Retailing Industry Group dropped 48.45 points to 1,175.74 as the Dow Jones industrial average lost 530.94 points, or 3.1 percent to close at 16,459.75. The declines came after the CAC 40 in Paris dropped 3.2 percent to 4,630.99 and the SSE Composite Index in Shanghai fell 4.3 percent to 3,507.74.
Prominent among the global fashion decliners as trading settled were: French Connection Group, down 11.1 percent to 28 pounds, or $43.88; Ross Stores Inc., which issued a weak outlook Thursday and fell 9.5 percent to $50; Under Armour Inc., 7 percent to $89.92; Vince Holding Corp.; 6.2 percent to $8.27; L Brands Inc., 4.4 percent to $80.29; Gap Inc., which saw sales and earnings declines last quarter and slipped 4.4 percent to $32.19; Amazon.com Inc., 4.1 percent to $494.50, and The TJX Cos. Inc. 3.4 percent to $29.01.
In addition to China, investors are keeping close tabs on cratering oil prices, continued upheaval in Greece and a U.S. consumer climate that has been strengthening, but is still relatively decaffeinated with shoppers staying choosy and spending only when brands really deliver.
That shows in the uneven earnings releases this week out of the retail sector.