U.S. retail stocks rallied 1.4 percent Wednesday as global markets continued to work their way back from the fallout of Europe’s debt crisis, which is being held in abeyance by a nearly $1 trillion bailout plan.
This story first appeared in the May 13, 2010 issue of WWD. Subscribe Today.
The S&P Retail Index gained 6.53 points to close at 474.39 Wednesday. Retail stocks are still down 5.1 percent from their postrecession high on April 26, just before the Greek debt troubles came to full boil. However, the sector is only 10.8 percent below its all-time high in February 2007.
Retail stocks typically rise coming out of economic downturns as relatively modest gains in sales and cost cuts translate into big increases on the bottom line.
Shares of Macy’s Inc. advanced 3.4 percent to $24.70 after a 7.2 percent rise in sales led the department store to a $23 million first-quarter profit. Among the day’s other gainers were Liz Claiborne Inc., up 9.6 percent to $6.94; Lululemon Athletica, 9.1 percent to $43.14; The Bon-Ton Stores Inc., 7.3 percent to $16.11; Sally Beauty Holdings Inc., 5.7 percent to 10.68; Perry Ellis International Inc., 5.3 percent to 23.90, and Rue 21 Inc., 4.6 percent to $35.45. The largest decline among stocks covered by WWD was Birks & Mayors Inc.’s 14.2 percent slide to $1.31.
Global markets, falling modestly Tuesday after a bailout-inspired run-up Monday, regained some upward momentum.
The Dow Jones Industrial Average increased 1.4 percent, or 148.65 points, to 10,896.91 Wednesday. The CAC 40 perked up 1.1 percent to 3,733.87 in Paris as the FTSE 100 advanced 0.9 percent to 5,383.45 in London.
Asian investors pushed the Hang Seng Index up 0.3 percent to 20,212.49 in Hong Kong as the Nikkei 225 slipped 0.2 percent to 10,394.03 in Tokyo.
Even though the joint European Union-International Monetary Fund bailout has bought Europe time to right its financial ship, investors were still hedging their bets and moving money into safe havens.
Gold futures for June delivery rose $19.20 to $1,239.50 an ounce, according to derivatives marketplace CME Group.