Retail stocks.

Higher crude oil did little to cheer investors as a statement from the Federal Reserve signaled caution over the direction of the global economy.

As a result, the Dow Jones Industrial Average shed 223 points while retail, fashion apparel and beauty stocks experienced sharp declines. The Fed said it is “closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.”

At the closing bell, the Dow fell 1.4 percent to 15,944 while the S&P 500 dropped 1.1 percent to 1,882. The Nasdaq lost 2.2 percent to close at 4,468. The S&P 500 Retailing Industry Group Index finished the day with a 1.9 percent decline to 1,165.

Earlier in the day, major indices in Europe closed up as crude oil jumped in morning trading. The FTSE 100 in London jumped 1.3 percent to 5,990 while the DAX in Frankfurt rose 0.6 percent to 9,881 and the CAC 40 in Paris rose 0.5 percent to 4,380. In Asia, all the major indices showed gains, but the Shanghai Index in China shed 0.5 percent to close at 2,736.

In the U.S., retailers and fashion and beauty brands closed the day deep in the red. Shares of Apple Inc. pulled down the sector with a 6.6 percent drop to $93.44 as traders punished the company for missing its revenue forecast. Other decliners included Delta Apparel Inc. with an 8.8 percent decline to $12; Bon-Ton Stores Inc. with a 8.6 percent fall to $1.60; Zumiez Inc. with a 6 percent drop to $16.86; Tilly’s Inc., which fell 5.8 percent to $6.29; Elizabeth Arden Inc. with a 5.3 percent decline to $7.46; Iconix Brand Group Inc.’s 4.7 percent decrease to $6.25; and Stage Stores Inc., which lost 4.5 percent to $7.87.

The gainers included J.C. Penney Co. Inc. with a 2.1 percent gain to $6.93; Coach Inc.’s 2.6 percent increase to $34.19; Men’s Wearhouse Inc. with a 2.7 percent jump to $12.95; Sears Holdings Corp.’s 3.3 percent increase to $17.41, and Destination Maternity Corp. with a 5 percent gain to $6.33.

In prior trading days, rising crude oil prices had correlated to higher equity trades. But the day’s 1.8 percent gain in the price of crude to $32.03 a barrel did nothing to raise stocks. Some analysts noted that oil, despite the increase, is still cheap. As in deflationary depressed cheap. Michael Thompson, managing director at S&P Capital IQ, said while “collapsing crude oil prices have severely shaken investor confidence in the global macroeconomic outlook” there’s more to the story: weakening corporate sales and earnings.

Thompson said anticipated calendar-year 2016 S&P 500 earnings per share are now expected to show a 4.7 percent aggregate decline. “Furthermore, the forward 12-month price-earnings (P/E) ratio on the S&P 500 has fallen to 15.1 times as of Jan. 20 from 16.4 times at the end of the third quarter,” he said. “This dramatic reassessment of prospective corporate earnings and market valuation partially reflects growing investor awareness in late 2015 and into early 2016 that U.S. economic fundamentals may not have been as strong as previously perceived before the Fed began policy normalization at year-end.”

In a research note, Thompson said there is also “growing concern that flat global industrial activity may foreshadow a more worrisome downturn in consumption or possibly even a recession.” The analyst told clients that although the “markets research team at S&P Capital IQ retains our somewhat injured optimism concerning the 2016 outlook for stocks, the global equity market meltdown is clearly telling us something that must be acknowledged.”

“The way we see it, global equities are either close to completing the valuation correction that in hindsight actually [occurred in] the first quarter of 2015 when the S&P 500 stalled at the 2,130 level at an elevated 18-time forward P/E market valuation, or the U.S. — and possibly the global economy — may be heading toward a deflationary recession,” Thompson said.

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