The News Herald (Willoughby, OH)
U.S. retailers small companies rally as Turkey fears ease
NEW YORK » U.S. stocks rallied Tuesday as banks, retailers, and smaller companies jumped. That helped the market recover most of its losses from the previous two days.
The Turkish lira steadied as officials from Turkey and the U.S. said the countries are in talks to ease diplomatic tensions, which have resulted in high tariffs on Turkish steel and aluminum. Stocks in emerging markets like Argentina, Russia and Brazil jumped.
In the U.S., the biggest gains went to small and mid-size companies, which do more business domestically compared to the large multinational firms on indexes like the S&P 500 and the Dow Jones Industrial average. Retailers rose, thanks in part to strong quarterly reports.
The reduced tensions with Turkey also stopped a rally in bond prices and sent yields and interest rates higher. That helped banks. Industrial and basic materials companies also rose Tuesday, but compared to other parts of the market, they didn’t recover as much of their losses.
Invesco Chief Global Market Strategist Kristina Hooper said investors are shifting money into more U.S.-focused companies in response to the Trump administration’s aggressive handling of its dispute with Turkey, a longtime member of NATO.
“This is a reminder that the U.S. is a very different country than it was just a few years ago,” she said.
The S&P 500 index climbed 18.03 points, or 0.6 percent, to 2,839.96. The Dow Jones Industrial Average gained 112.22 points, or 0.4 percent, to 25,299.92. The Nasdaq composite added 51.19 points, or 0.7 percent, to 7,870.89. The Russell 2000 index advanced 17.26 points, or 1 percent, to 1,692.58.
The S&P 500 fell a combined 1.1 percent Friday and Monday as investors worried that Turkey’s financial woes would affect other countries.
Many retailers will report their quarterly results this week, a potential hint about how much money consumers are spending. Tapestry, the parent company of Coach and Kate Spade, jumped after its fourth-quarter results surpassed analysts’ estimates. The stock surged 12 percent to $53.16.
Auto parts retailer Advance Auto Parts jumped 7.8 percent to $156.13 after it did better than expected in the second quarter. Competitors AutoZone and O’Reilly Automotive climbed as well.
Smaller companies made outsize gains. Footwear maker Wolverine World Wide gained 2.4 percent to $38.39 and watchmaker Fossil rose 4.8 percent to $25.68.
Among midsize companies, Boston Beer picked up 3.9 percent to $291.30 and RV maker Thor Industries rose 2.6 percent to $97.06.
Global markets fell Friday and Monday on concern that Turkey’s currency turmoil could spread to banks in other countries and affect the world economy. The Argentine peso and India’s rupee hit record lows against the dollar. Those jitters eased later Tuesday.
Economists say Turkey’s central bank still needs to raise interest rates significantly to strengthen its currency. President Recep Tayyip Erdogan has ruled out that step.
Hooper, of Invesco, said it’s common for stocks to fall across emerging markets when one country is in trouble, but that reaction isn’t necessarily justified.