BUSINESS Stocks turn higher after early slide; Macy’s nosedives

BUSINESS

Stocks turn higher after early slide; Macy’s nosedives

AP

01:45, January 11, 2019

Stocks.jpeg

Specialist Petert Mazza left, and trader Rayn Falvey work on the floor of the New York Stock Exchange on Thursday, January 10, 2019. (Photo: AP)

After a shaky start, US stocks are mostly higher at midday Thursday as industrial companies, utilities and household goods makers rise. The S&P 500 is on track for its fifth consecutive gain.

KEEPING SCORE: The S&P 500 index rose 2 points, or 0.1 percent, to 2,587 as of noon Eastern time. The Dow Jones Industrial Average picked up 45 points, or 0.2 percent, to 23,924 after falling as much as 175 Thursday morning. The Nasdaq composite edged up 6 points, or 0.1 percent, to 6,963. The Russell 2000 index of smaller-company stocks added 2 points, or 0.2 percent, to 1,441.

BLACK EYE-DAY: Macy’s said holiday sales slowed in the middle of December and the department store cut its annual profit and sales forecasts. Its stock plunged 18.2 percent to $25.94 in heavy trading. Kohl’s sank 6.8 percent to $65.16 after it said sales grew at a slower pace than they did a year ago, and L Brands fell 4.9 percent to $26.85 after it said Victoria’s Secret sales sank over the holidays.

Other retailers also took steep losses. Gap lost 2.8 percent to $25.33 and Capri Holdings, the parent company of Michael Kors and Versace, skidded 3.5 percent to $40.39. Estee Lauder fell 2.7 percent to $124.38.

Macy’s announcement came as a surprise because investor expectations for the holiday season have been high. Unemployment is the lowest it’s been in decades, wages are rising and consumer confidence is high, while gas prices dropped late last year. In late December, stocks rallied after Mastercard SpendingPulse said shoppers spent $850 billion between Nov. 1 and Dec. 24, an increase of 5 percent from the same time a year earlier.

But the stock market fell sharply in October and then took a dramatic plunge over the first three weeks of December. Shortly afterward the federal government went into a partial shutdown that is still ongoing. All of that may have made shoppers less willing to spend.

THE QUOTE: “High-end consumers, even though they’re making decent money (and) the economy is going on relatively strong, it may have affected their willingness to splurge over the holidays,” said Ken Perkins, president of the research firm Retail Metrics. “It was not good timing at all.”

While retailers took steep losses Thursday, Perkins said the market turmoil is a much bigger problem for companies like Macy’s because most stocks are owned by relatively wealthy people. That means big box stores and companies that sell less expensive goods won’t be affected as much, as shown by Target’s stronger sales report. Perkins added that said Amazon likely had a “stellar” holiday season.

STUCK ON THE RUNWAY: Airlines skidded after American said its fourth-quarter revenue growth at the low end of its projections. Delta gave a similarly disappointing forecast a week ago. American fell 6.8 percent to $31.16 while Delta lost 2.2 percent to $47.40 and United dropped 4.8 percent to $79.71.

BONDS: Bond prices gave up an early gain. The yield on the 2-year Treasury note stayed at 2.55 percent and the yield on the longer-term Treasury note remained at 2.72 percent.

ENERGY: Oil prices dipped after hitting their highest levels in almost a month. U.S. crude fell 0.2 percent to $52.23 a barrel in New York and Brent crude slid 0.3 percent to $61.25 a barrel in London.

OVERSEAS: France’s CAC 40 lost 0.3 percent while Germany’s DAX edged up 0.2 percent. The British FTSE 100 rose 0.3 percent.

Japan’s Nikkei 225 index, which gained more than 1 percent on Wednesday, fell 1.3 percent and the Kospi in South Korea dropped 0.1 percent. Hong Kong’s Hang Seng recovered from early losses and added 0.2 percent.

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