A steep decrease in housing starts and some ongoing jitters of an interest rate hike softened U.S. stocks today — adding to a month of volatility that had seen stout gains and sharp declines from day to day. The Dow Jones Industrial Average closed down 0.7 percent to 17,849.08 while the S&P 500 lost 0.7 percent to finish at 2,074.20. The WWD Global Stock Tracker fell 0.5 percent to 114.92.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development said earlier today that February housing starts (for privately owned homes) came in 17 percent below estimates and 3.3 percent lower than the same month last year while single-family housing starts were 14.9 percent lower than forecast. Economists said the declines were weather related. Meanwhile, the Federal Reserve is expected to make a statement on Wednesday on interest rates, following a two-day policy meeting.
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Despite today’s market declines, the WWD Global Stock Tracker remains strong, and is up 19 percent over the past six months. The tracker is being fueled by some vigorous valuation gains across several sectors and regions. However, for the prior three months, the tracker is trending up about 8 percent — clearly revealing a deceleration in prices. Still, of the 100 stocks in the tracker, 68 companies have advanced in price over the trailing three months while 32 have declined.
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In the Asia-Pacific region, Fast Retailing Co.’s stock trending up 34 percent in the past six months, trading at about the 46,000 Japanese yen mark, or about $381. Investors are responding to the company’s robust sales and earnings as well as strong top-line revenue projections.
In Europe, Luxottica Group SpA and Ted Baker plc are both up about 48 percent, trading at 59 euros, or $62, and 27 British pounds, or $40, respectively. Luxottica is leveraging appeal for accessories and eyewear in North American while Ted Baker has enjoyed consistently strong sales at home in Britain as well as in overseas markets.
In the U.S., Ross Stores Inc. is up over 40 percent and trading at the $107 mark — an all-time high. The off-price retailer has continued to deliver strong sales and earnings while gaining market share. And analysts are noting that the retailer’s merchandise mix is strongly resonating with consumers. Earlier this month, the company said it opened 37 new stores.
Jim Fassio, president and chief development officer, said in a statement that the openings reflect “ongoing plans to further increase our presence in existing markets while also expanding in the newer markets which we entered back in 2011.”
Another top stock performer is Lululemon Athletica Inc., which is up 45 percent over the past six months and 70 percent since last June. L Brands Inc. has also been a top performer, trading up about 40 percent to the $92 range. The retailer’s fundamentals are solid, and the company reported strong same-store sales in recent months. Shares have been hovering at the high-end of its 52-week range and its trailing price-to-earnings ratio is about 26 percent, which is slightly higher than the apparel sector’s average of 25.3 percent.
The WWD Global Stock Tracker has also had some steep decliners in the six-month period. In the U.S. sector, Abercrombie & Fitch Co. is down over 50 percent as it has lost its mojo with hip and young shoppers. Esprit Holdings Ltd. is also down about 40 percent and is faced with similar woes.
The European firms have been the most resilient, and of the 24 stocks in the WWD tracker, only three have shown declines in the six-month period: Brunello Cuccinelli SpA; Puma; and The Swatch Group Ltd. All have had less-than double-digit declines.
It’s unclear how markets will react if the Federal Reserve raises interests rates. A strong dollar, weak euro and slumping crude oil prices will also play into investment decisions.