MW: Retail stocks inch up as inflation remains tame
By Andria Cheng, MarketWatch
NEW YORK (MarketWatch) — Retail stocks made gains Wednesday as government data showed that U.S. consumer inflation, despite ticking higher, remains tame and that conditions for manufacturers in New York state have recovered following a rough November.
The S&P Retail Index (RLX 505.43, -3.74, -0.73%) rose 0.5% to 505.38.
The Empire State manufacturing survey for December stood at 10.6, recovering nearly 22 points after a negative reading in November, the Federal Reserve Bank of New York reported. See full story on the manufacturing report.
Meanwhile, the Labor Department reported the consumer price index rose 0.1% in November, as prices for food and energy each increased 0.2%. The change in energy prices was the smallest since June.
Led by increases for shelter and airline fares, the core CPI, which excludes food and energy costs, rose 0.1%, its first gain since July.
Economists said that showed signs of inflation remain tame. In the past year, the overall CPI has increased 1.1%, while the core gauge has gained 0.8%. See full story on consumer inflation.
The Federal Reserve target for inflation is about 1.6% to 2%. On Tuesday, the U.S. central bank reiterated concerns that “measures of underlying inflation are somewhat low.”
Illustrating concerns by different clothing companies, apparel prices saw their biggest increase since July.
Among Wednesday’s retail-sector gainers, jewelry retailer Tiffany & Co. (TIF 63.79, +0.62, +0.98%) shares traded up 1% as close-out chain Big Lots Inc. (BIG 28.43, +0.52, +1.86%) rose 1.4%.
Among the decliners, shares of electronics leader Best Buy Co. (BBY 35.19, -0.33, -0.93%) fell less than 1%, a day after its stock dropped 15% — the biggest decline in more than eight years — as a result of a profit and sales shortfall. See full story on Best Buy.
The rating on Best Buy’s stock also was cut by Oppenheimer & Co., which revised lower its price target to $39 from $53 previously.
Shares of smaller rival RadioShack Corp. (RSH 18.42, -0.22, -1.15%) also dropped, down nearly 1%.
