MW: Surprise gain in goods orders lifts range of stocks
Retail stocks were solidly higher Wednesday morning after a fresh U.S. economic report raised hopes that the slump in domestic demand may have turned a corner.
A separate report of a larger-than-expected rise in new home sales nationwide also added to the positive sentiment.
The S&P Retail Index jumped 2% to 291.97.
U.S. stocks were higher across the board after the Commerce Department reported that February orders for durable goods jumped 3.4%. The unexpected rise, driven by demand for machinery and other capital goods, marked the first increase after six straight monthly drops. See full story.
Sales of new homes nationwide rebounded a higher-than-expected 4.7% in February after hitting a record low in the prior month, the Commerce Department reported Wednesday. See full story. That followed the National Association of Realtors report Monday that sales of U.S. pre-owned homes rose at the biggest percentage rate since July 2003.
Home improvement retailers got a boost from the encouraging housing data. Home Depot Inc. shares rose 3.7% and Lowe's Cos. shares rose 3.7% and Lowe's Cos. shares were up 4.8%.
Kohl's Corp. shares were flat after Citigroup removed it from its "top picks conviction list." The move was due to a lack of upside potential even though the company's fundamentals remain on a "positive trajectory," said analyst Deborah Weinswig, who still rates the shares buy.
Compared to its department store peers, Kohl's stock has appreciated 18.2% year-to-date versus the department store average increase of 4.6% and the S&P Retail Index increase of 2.5% over the same period, she said.
Wal-Mart Stores Inc. shares rose 1.9%. The world's largest retailer said it's launching Your Zone, a home-furnishings collection for teens. Products include comforter sets priced from $28 to $40 and sheet sets from $12 to $24. The introduction follows other lines including Better Homes and Gardens and Canopy, Wal-Mart said.
Talbots Inc. shares rose 6.4% to $3.55. The women's clothing retailer on Tuesday named John Fiske III as chief stores officer, effective immediately.
Fiske had previously served as Talbots' executive vice president of human resources and administration. In his new role, Fiske, 44, is responsible for overseeing all Talbots' retail operations in the U.S. and Canada.
