MW: Retail sector falls as investors await word from Fed
Retail stocks headed lower Wednesday ahead of the conclusion of the two-day Federal Reserve meeting. The sector also was hurt by a government report showing slightly higher-than-expected consumer price increases.
The S&P Retail Index fell 0.8% to 267.19, reversing a 5.4% gain Tuesday, with investors awaiting the results of the Federal Reserve meeting. The U.S. central bank already slashed rates to zero to bolster the economy. See full story.
With energy prices rising at the fastest rate in seven months, U.S. consumer prices increased a seasonally adjusted 0.4% in February, the Labor Department reported Wednesday. Energy prices increased 3.3% in February, the government said, including an 8.3% gain in gasoline prices. Food prices fell 0.1%, the first decline in nearly three years. Excluding food and energy prices, the core CPI increased 0.2% for the second month in a row, boosted by higher prices for new cars, clothes and cigarettes. The February inflation and core inflation figures were a tenth of a percentage point higher than expected by economists surveyed by MarketWatch. See full story.
Wal-Mart Stores Inc. had credited a drop in gasoline price in helping to increase the pocket-money of its budget-conscious shoppers.
Among the decliners, Nordstrom Inc. shares were down 3.4% while Saks Inc. shares fell less than 1%. Both upscale retailers, along with their private rival Neiman Marcus, saw their debt ratings each lowered by Moody's Investors Service.
Guess Inc. shares rose 5.5% after the company late Tuesday reported profit excluding items that exceeded Wall Street expectations. It declined to give a full-year profit forecast.
Fourth-quarter profit fell 13% to $47.9 million, or 52 cents a share, from $55.2 million, or 59 cents, a year earlier. Sales rose 9% to $561 million, while same-store sales declined 6.5%. Guess said it reduced inventories and slowed new-store development during the quarter. For the current quarter, Guess projected it would earn 26 cents to 30 cents a share. Analysts polled by FactSet Research were looking for 36 cents.
Sherwin-Williams Co. shares fell 4.6%. Longbow Research cut the rating on the stock to sell from neutral.
Limited Brands Inc. shares fell 1%. The owner of Victoria's Secret named Joanne Nemeroff as president of its La Senza lingerie chain.
