The Federal Reserve caught a bit of the European debt jitters — noting that developments abroad have made financial conditions “less supportive” of growth — but investors Wednesday looked past the assessment, which simply underlined the general sentiment that already had depressed markets.
The S&P Retail Index inched up 0.2 percent, or 0.92 points, to 416.74 Wednesday as the Dow Jones Industrial Average increased just 4.92 points to 10,298.44. Retail gainers included Bebe Stores Inc., up 4.7 percent to $6.63; The Men’s Wearhouse Inc., 3.3 percent to $19.53; Chico’s FAS Inc., 3.1 percent to $10.92, and Aéropostale Inc., 1.8 percent to $29.88.
The Fed’s open market committee, led by chairman Ben Bernanke, reiterated that interest rates would be kept “exceptionally low” for “an extended period.” “Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit,” the committee said.
“Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad,” the committee said.
Although that was a reference to the debt crisis that started in Greece and has cast a shadow over Europe, retail investors have been thinking along the same lines this week. They have been casting their eyes more toward China, where policy makers indicated they might allow the yuan to begin appreciating, making it more expensive for Western firms to buy Chinese-made goods.
“While we believe some type of increase in apparel prices is inevitable, especially in 2011, we are not as worried as many investors appear to be,” said Eric Beder, analyst at Brean Murray, Carret & Co.
Beder said apparel is relatively inexpensive after years of deflation, and consumers would accept higher prices for strong fashions.
“Clothing is not milk, an everyday purchase of an undifferentiated item that leads to almost immediate notice when prices change,” Beder said. “Natural shifts in trends — i.e., from clean denim to distressed denim looks — bring price increases.”
Global stock markets generally pulled back on Wednesday.
The CAC 40 fell 1.7 percent to 3,641.79 in Paris, as the FTSE 100 dropped 1.3 percent to 5,178.52 in London and the DAX slipped 1 percent to 6,204.52 in Frankfurt.
The Nikkei 225 fell 1.9 percent to 9,923.70 in Tokyo as the SSE Composite Index dipped 0.7 percent to 2,569.87 in Shanghai and the Hang Seng Index ticked up 0.2 percent to 20,856.61 in Hong Kong.
• Faranda Joins Movado: Joe Faranda, former chief marketing officer of International Flavors & Fragrances, has joined Movado Group Inc. in the new post of senior vice president of consumer insights and strategic planning for the Movado and ESQ by Movado brands. Faranda, who reports to Efraim Grinberg, chairman and chief executive officer of Movado, spent 17 years with Avon Products Inc. in positions including vice president of marketing research. His responsibilities at Movado include the development and oversight of strategic plans for the two brands, monitoring market trends and supervising consumer insight programs.