U.S. stocks bolted out of the gate this morning as oil rallied and headed for a weekly gain of 9 to 10 percent — well-above the $40 a barrel price threshold.
But retail stocks were varied as investors continued to digest downwardly revised retail sales data from the government as well as lower year-over-year sales from Tiffany & Co. this morning, and an after-market announcement from Aéropostale Inc. Thursday that said it was “exploring strategic alternatives.“
At the opening bell, the Dow Jones Industrial Average jumped 50 points, or 0.3 percent, to 17,534 while the S&P 500 also gained 0.3 percent to 2,046 and the Nasdaq climbed 0.3 percent to 4,788. The S&P 500 Retailing Industry Group Index rose 0.3 percent to 1,248.
Among the decliners were Aéropostale Inc., which fell 53.3 percent to 22 cents; Destination XL Group Inc. with a 6.7 percent drop to $4.91, which followed a disappointing earnings report, for Wall Street at least; Bon-Ton Stores Inc. with a 3.6 percent decline to $2.39, and Vera Bradley Inc. with a 1.3 percent drop to $19.81.
The gainers included Bebe Stores Inc. with a 3 percent gain to 64 cents; Lands’ End Inc. with a 3.9 percent increase to $26.14; Pacific Sunwear of California Inc. with a 6.5 percent gain to 15 cents, and New York & Co. Inc. with a 18.6 percent gain to $3.13, which followed its after-market earnings report yesterday.
Asian markets were closed, and all the major indices in Europe were up. Crude oil was up 1.5 percent to $42.28.
With Aéropostale, Eric Beder, equity analyst at Wunderlich Securities, said he was “reiterating our ‘hold’ rating on Aéropostale and lowering our financial estimates following Aéropostale reporting dreary [quarterly] results, announcing the exploration of strategic operational and financial alternatives and a dispute with lender [and supplier] Sycamore Capital.”
Beder said the quarterly results “illustrate the inability of the current structure to generate any level of material growth or profitability.”
“While we would consider that a drastic reorganization or sale of the brand could synthesize some degree of value, we find the risk/reward profile is far too negatively skewed, and thus we remain on the sidelines on [Aéropostale] shares,” he added.
At the bell, shares of Nike Inc. were up 0.3 percent to $63.31 following a report from Telsey Advisory Group that noted fourth quarter profits should exceed consensus estimates. Telsey analysts are expecting “an 11.1 percent increase in total sales to $8.29 billion, above the consensus estimate of $8.2 billion.”
The analysts are expecting gross margins to decline about 50 basis points as gain in higher-end products “are more than offset by higher markdowns to clear through inventory in North America, higher labor costs, and foreign exchange [costs].”
“We continue to view Nike as a best-in-class player and maintain our price target of $72,” the analysts said, adding that it has an “outperform” rating on the stock.