Small caps up despite retail sales
The Russell 2000 (NYSE: IWM) is gaining despite news of weak retail sales in January.
At 10:18 a.m. ET, the small-cap index had added 8.09 points, or 1.17%, to 700.58. The Dow Jones Industrial Average (INDU) was up 48.77 points, or 0.40%, to 12,248.87.
Retail sales in January largely missed already low expectations, indicating that consumers have pulled back and the economy is either headed for a recession or already in one.
Wal-Mart Stores, Inc. (NYSE: WMT), the world’s largest retailer, announced that its January same-store sales increased just 0.5%, below the forecasted 2%. Worse, the Bentonville, Ark.-based giant said that consumers are using their gift card redemptions more for food and consumables than for discretionary items.
In other economic news, the U.S. Labor Department reported before the start of trading that initial jobless claims for the week ended Feb. 2 fell 22,000 to 356,000 from the previous week’s upwardly revised figure of 378,000.
The numbers disappointed economists, who were expecting a bigger decline.
The bearish economic news is dragging down the Russell 2000 out of the gate, but the small-cap index separated itself from its bigger brothers shortly after 10 a.m. ET when it moved into the green.
Participating in the surprise rise is talent management solutions provider Taleo Corp. (Nasdaq: TLEO), which reported a rise in fourth-quarter earnings and revenue.
Meanwhile, diversified manufacturing company Griffon Corp. (Nasdaq: GFF) said that it swung to a $1.36 million loss in its fiscal first quarter due to the weak housing market, which adversely affected its garage-door business.
Feeling the pinch of softening consumer spending is retailer Fred’s, Inc. (Nasdaq: FRED), which announced that it will close 75 stores in an attempt to cut costs and increase operating margin. The Memphis-based company also said that January sales declined.
