U.S. retail stocks continued to fall Wednesday, dropping 0.6 percent even as broader markets regained some of the ground lost after Standard & Poor’s shined a spotlight on Europe’s credit troubles with downgrades for Greece and Portugal.
This story first appeared in the April 29, 2010 issue of WWD. Subscribe Today.
The S&P Retail Index fell 2.74 points to 478.33 after a 3.2 percent drop the day before, its worst day since August. Among the retailers losing ground Wednesday were AnnTaylor Stores Corp., down 3.4 percent to $22.68; Abercrombie & Fitch Co., 2.7 percent to $46.60, and Nordstrom Inc., 0.9 percent to $42.46.
The Dow Jones Industrial Average retook 11,000, rising 0.5 percent, or 53.28 points, to 11,045.27 after the Federal Reserve reiterated its intention to keep interest rates exceptionally low for “an extended period.”
“Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit,” said the Federal Open Market Committee, led by Fed chairman Ben Bernanke.
Despite the stock stabilization in the U.S., the sell-off continued in Europe. S&P issued a third downgrade, this time for Spain, which saw its long-term sovereign debt rating fall to “AA” from “AA-plus.”
“The Spanish economy’s shift away from credit-fueled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed,” said Marko Mrsnik, S&P debt analyst. “We now project that real GDP growth will average 0.7 percent annually in 2010 to 2016, versus our previous expectations of above 1 percent annually over this period.”
The CAC 40 fell 1.5 percent to 3,787 in Paris and the FTSE 100 slid 0.3 percent to 5,586.61 in London. Athens’ ATHEX index rose 0.6 percent. The euro rose to back above $1.32.
Asian investors were also wary of the expanding credit concerns in Europe and pushed the Nikkei 225 down 2.6 percent to 10,924.79 in Tokyo and the Hang Seng Index down 1.5 percent to 20,949.40 in Hong Kong.