Retail stocks fell 1.2 percent Tuesday, logging their third consecutive decline as investors gauged China’s efforts to moderate its economic policies and fretted over a weaker-than-expected quarterly performance from aluminum maker Alcoa Inc.
This story first appeared in the January 13, 2010 issue of WWD. Subscribe Today.
The S&P Retail Index lost 5.04 points to 408.60 and the Dow Jones Industrial Average dipped 0.3 percent, or 36.73 points, to 10,627.26, as stocks in the commodity and industrial sectors followed Alcoa’s lead down.
International markets declined, with the CAC 40 down 1.1 percent to 4,000.05 in Paris, the FTSE 100 off 0.7 percent to 5,498.71 in London and the Hang Seng Index down 0.4 percent to 22,326.64 in Hong Kong. However, in Tokyo, the Nikkei 225 picked up 0.8 percent to 10,879.14.
On Tuesday, Xinhua, China’s official news service, said the People’s Bank of China would increase the amount of money banks need to hold in reserve, reducing the funds available to lend. This could tamp down rising prices, but also cool economic expansion. China cut the reserve requirement four times in late 2008 to stimulate growth as the global financial crisis bore down. Chinese exports broke a 13-month string of declines and rose 17.7 percent last month.
China has been a bright spot in the global economy, generating continued expansion, but much of the growth has come from $586 billion in government spending on infrastructure projects such as roads and railways.
Among the U.S. retail decliners Tuesday were Zale Corp., off 11.5 percent to $3.15; The Bon-Ton Stores Inc., 9.4 percent to $10.06; Coldwater Creek Inc., 9 percent to $4.84; New York & Company Inc., 4.3 percent to $4.26; Pacific Sunwear of California Inc., 4.2 percent to $3.92, and Nordstrom Inc., 4 percent to $36.81. Caché Inc. fell 9.5 percent to $4.29 after cutting its fourth-quarter profit outlook late Monday.
On a day when losers heavily outnumbered gainers, among the vendors seeing decreases were Liz Claiborne Inc., down 8.5 percent to $5.37; Jones Apparel Group Inc., 3.5 percent to $16.30, and Polo Ralph Lauren Corp., 2 percent to $83.82.