HEAVY TRADING, BUT WALL ST. LOOKS MORE NORMAL
NEW YORK — With retail stocks strong and apparel stocks turning in a mixed performance, the U.S. market settled into a near-normal pattern Wednesday after Monday’s slump and Tuesday’s jump. But there was still some apparent fallout from the frantic action earlier in the week.
Although the Dow Jones Industrials finished with a modest 8.35-point gain, volume on the New York Stock Exchange was 770 million shares, second only to Tuesday’s 1.19-billion-share turnover, and during the day, prices yo-yoed to activate 50-point triggers on both the upside and downside.
Tommy Hilfiger, which reported a strong gain in profits, but an even stronger gain in inventory levels, took a 2 15/16 point hit, dropping to 41. However, Gucci Group, which has been under heavy downward pressure recently, picked up 2 3/8 to close at 36 1/2. Donna Karan International slipped 5/16 to 14 3/8; Polo Ralph Lauren eased 1/4 to 25 1/4 and Nautica fell 1 1/2 to 26 3/4.
Retail stocks were led on the upside by Carson Pirie Scott, which soared 7 5/8 to 45 1/8 in the wake of an agreement to be acquired by Proffitt’s. Profitt’s stock also was up, adding 1 3/8 to 28 1/8. Other point-plus retail gainers include Federated Department Stores, 1 5/16 to 42 5/8; Nordstrom, 1 1/16 to 58 1/8; Mercantile Stores, 1 1/16 to 58 1/8; Gap, 1 5/16 to 51 9/16; Ross Stores, 1 3/8 to 37 3/16, and Dress Barn, 1 1/4 to 24 1/2.
Fractional gainers include Dillard’s, 15/16 to 37 11/16; Dayton Hudson, 7/8 to 61; Kmart Corp., 3/16 to 12 7/8; The Limited, 7/16 to 22 5/8; May Department Stores, 1/2 to 54 1/4; Neiman Marcus Group, 7/16 to 33 3/4; Sears, Roebuck, 13/16 to 42; TJX Cos., 1/4 to 29, and Wal-Mart Stores, 3/16 to 34 3/4.
Saks Holdings was one of the few retail losers, dipping 3/8 to 21 1/2. Talbots dropped a point to 23 11/16, and Spiegel gave up 3/8 to 6.
On the heels of Tuesday’s 337-point jump on the Dow, Asian markets turned up sharply Wednesday, with stocks in Hong Kong soaring 19 percent and Tokyo’s leading index gaining 3.3 percent. Other markets in the area were also strong. It was the sharp decline on the Hong Kong market last week and early this week that was widely seen as the trigger for Monday’s 554-point crash of the Dow.
In Paris, investors breathed at least a temporary sigh of relief Wednesday when the CAC 40, the Bourse’s leading indicator, closed up 6.29 percent to 2,818 points.
Luxury stocks slightly outpaced the market, with one big exception: Clarins, which jumped 15.38 percent to close at $77.58 (450 francs) at current exchange. Other upward trends were seen at L’Oreal, which closed at $371.55 (2,155 francs), up 8.18 percent; LVMH shares closed at $176.55 (1,024 francs), up 7.79 percent, and Hermes shares closed at $65.17 (378 francs), up 7.08 percent. France’s finance minister, Dominique Strauss-Kahn, sought to reassure investors during the day by stressing that growth in France and Europe would not be affected by the current market swings.
And Milan recouped nearly all of its 6.2 percent drop on Tuesday, closing up 5.04 percent. “The turbulence isn’t over yet, but everybody was breathing a lot easier by the end of the day,” said Francesca Rulli, equities analyst with Milla Sim.
In Milan’s textile and apparel sector, Benetton rose 3.88 percent at $14.70 (25,000 lire), while Simint and Stefanel outpaced the market to close up 6.16 percent to $7.45 (12,668 lire) and up 6.86 percent to $2.02 (3,444 lire), respectively. Marzotto slumped against the trend, losing 0.49 percent to $10.86 (18,469 lire), but analysts attributed the decline to profit taking after recent gains.
In Amsterdam, where Gucci is also traded in addition to the New York Exchange, the stock rallied 16.2 percent to close at $37.40 (73.2 guilders).
“I put out a ‘strong buy’ on Gucci today because at these prices it’s ridiculously cheap,” said Paul Gordon, an equity analyst with IMI-Sigeco in Milan. With the possibility of a hostile takeover much more feasible at current prices than during the days when Gucci shares were going at around $80 a pop, Gucci (which is 100 percent public) has proposed new voting restrictions designed to protect investors from anyone who might try to build a controlling stake in the company.
The amendments, which are set to be voted on at a Nov. 6 extraordinary shareholders meeting, would limit voting rights to 20 percent, even if a single investor holds more than that.