RETAIL ENJOYS DOW SURGE
Byline: Vicki M. Young
NEW YORK — Retail and apparel issues went along for the ride Wednesday as the Federal Reserve surprised investors with a half-point reduction in interest rates, to 4.5 percent, sending the Dow soaring 399.1 points and the Nasdaq up 156.22.
The Fed’s fourth cut of the year left rates 2 percent below this year’s 6.5 percent peak. Tuesday’s cut was the second in 2001 made in between regularly scheduled Fed meetings.
Calling economic conditions “unacceptably weak,” the Fed said in a statement, “Capital investment has continued to soften and the persistent erosion in current and expected profitability, in combination with rising uncertainty about the business outlook, seems poised to dampen capital spending going forward.”
The Fed statement also said that based on information currently available, the “risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future.” In short, the Fed views recession as the biggest threat to the economy.
The Dow closed at 10615.83, up 3.9 percent, while the Nasdaq ended the trading session at 2079.44, up 8.1 percent. Retail stocks fared better than vendor issues on news of the rate cut.
Among the teen retailers trading on the Nasdaq, American Eagle Outfitters closed at $34.33, up $2.82, or 9 percent; Bebe Stores closed at $21, up $2.43, or 13.1 percent, and Pacific Sunwear closed at $25.80, up $2.11, or 8.9 percent. Among retailers trading on the New York Stock Exchange, Kohl’s closed at $60.76, up $5.41, or 9.8 percent; Target Corp. at $38.25, up $2.90, or 8.2 percent, and Tiffany & Co. at $29.65, up $2.76, or 10.3 percent.
In Big Board trading among vendors, Coach Inc. closed at $25.25, up $1.45, or 6.1 percent; Gucci closed at $83.40, up $4.32, or 5.5 percent; Liz Claiborne closed at $46.22, up $1.87, or 4.2 percent, and Polo Ralph Lauren closed at $26.25, up $2.04, or 8.4 percent.