Retail stocks race higher after a slight cooling of inflation lifts sentiment
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Retail stocks jumped in mid-day trading on Wednesday after a moderation in CPI to a pace of 8.5% in July from 9.1% in June raised hopes that inflation has peaked and interest rate forecasts for late 2022 through 2023 will be brought down somewhat.
"The deceleration in the Consumer Price Index for July is likely a big relief for the Federal Reserve, especially since the Fed insisted that inflation was transitory, which was incorrect... If we continue to see declining inflation prints, the Federal Reserve may start to slow the pace of monetary tightening," updated Quadratic Capital Management's Nancy Davis after the CPI print.
Mall stocks were notable outperformers with Citi Trends (NASDAQ:CTRN) +8.20%, Victoria's Secret (VSCO) +6.16%, Torrid Holdings (CURV) +5.98%, On Holding AG (ONON) +5.95%, Boot Barn Holdings (BOOT) +5.40%, American Eagle Outfitters (AEO) +5.25%, Express (EXPR) +5.05%, Guess' (GES) +4.77%, and Lululemon Athletica (LULU) +4.70% all posting gains.
The positive vibe also extended to apparel and footwear manufacturers like Under Armour (UAA) +5.37%, Levi Strauss (LEVI) +5.22%, Capri Holdings (CPRI) +5.04%, PVH Corp. (PVH) +4.89%, Kontoor Brands (KTB) +4.62%, and Canada Goose (GOOS) +4.11%.
Other gainers included Target (TGT) +4.43%, Etsy (ETSY) +6.18%, Bath & Body Works (BBWI) +4.55%, CarMax (KMX) +4.20%, and Nike (NKE) +2.95%.
The SPDR S&P Retail ETF (XRT) rose 3.96% to outpace broad market averages.
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