IMPROVED DYNAMICS BRING STOCK UPGRADES

Byline: Jennifer Weitzman

NEW YORK — With spring in the air, all three market indices sprung back in late afternoon trading Monday as investors shopped for bargains, pondered the future of interest rates and reconsidered retailing.
With Wall Street’s worst week in over a decade now in the past, a number of teen specialty retailers and apparel companies were upgraded as a result of improved sales expectations.
Steven A. Richter, retail analysts with Tucker Anthony, said: “The time is right to look at the key youth retailers entering a period of easier comparisons against the miserable spring last year,” he said, adding that he upgraded Abercrombie & Fitch, American Eagle Outfitters, Pacific Sunwear and Quiksilver to “strong buy” from “buy.”
Citing its growth potential, Jennifer Black, retail analyst with Well Fargo Van Kasper, upgraded Nordstrom Inc. to “buy” from “market perform.” Nordstrom closed up 42 cents, or 2.5 percent, to $17.41.
Following a bumpy morning, the financial- and consumer-heavy Dow Jones Industrial Average and Standard & Poor’s 500 headed north at day’s end. After briefly flirting with 10,000, the Dow closed up 135.7 points, or 1.4 percent, to 9,959.11, while the S&P was up 20.32 points, or 1.8 percent, to 1,170.85. The technology-heavy Nasdaq closed up 60.53 points, or 3.2 percent, to 1,951.44.
The Federal Reserve Bank meets today, with economists expecting a half-point cut in interest rates and hoping for a more aggressive three-quarter point cut.
According to Richter, A&F is enjoying a solid reception to early spring fashions, particularly women’s. Stock prices closed at a new 52-week high, up $1.99, or 6.2 percent, to $33.98.
Richter also said that American Eagle Outfitters, which indicated March business had improved when it reported fourth-quarter earnings, has continued to gain market share. Shares closed up $2.75, or 9.5 percent, to $31.56. The American Eagle Outfitters was also upgraded by Janney Montgomery Scott to “accumulate” from “hold.” Shares at PacSun closed up $4.25, or 17.1 percent, to $29.13, as a result of a handful of upgrades, and Quiksilver’s shares edged up 90 cents, or 3.3 percent, to $28.10.
“Like PacSun, we believe the company [Quiksilver] is favorably positioned as an authentic brand in the board sport category, which has less focus by some other retailers this year,” Richter said.