Retail Misses Post-Election Rally on Wall Street

Election wait-and-see mode might not sit well with many retail investors, but it could be just fine for consumers — at least right now. 

But much will depend on how an anxious nation reacts as key states count ballots in the presidential election pitting former vice president Joe Biden against President Trump. Stores in shopping districts across the country boarded up ahead of the election, guarding against social unrest and turmoil that largely hasn’t come. Shoppers are expected to keep clicking online despite the uncertainty.

Wall Street continued to move higher Wednesday, extending its run up this week, but with a different rationale — one that didn’t help retail. 

The Dow Jones Industrial Average increased 2.1 percent, or 580.74 points, to 28,060.77. The betting earlier in the week was that Biden would beat out Trump and Democrats would take full control of Congress, leading to a big new stimulus package to temper the fallout from the pandemic. That would help ease the pain of those who are out of work, especially with unemployment still very high at 7.9 percent, more than twice what it was a year earlier.  

Now, with a much more muddled electoral map than many expected and no decisive “blue wave” of victories for Democrats, investors seemed to be retrenching and were once again buying tech stocks that gained early in the pandemic.

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“It’s kind of like we’re stepping back six months,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “The safe trade is technology because it’s very evident that with a split Congress and a divided government, we’re not going to get tons of stimulus.”

When WWD asked more than 75 fashion executives what they wanted from the next administration, unity and a coordinated response to the coronavirus pandemic and more stimulus were at the top of the list.

Among the fashion companies losing ground on Wednesday were Nordstrom Inc., down 6.4 percent to $12.50; Fossil Group Inc., 6.4 percent to $5.89; Dillard’s Inc., 5.2 percent to $45; Macy’s Inc., 4.9 percent to $6.27; Urban Outfitters Inc., 4.6 percent to $23.30; G-III Apparel Group, 4.5 percent to $14.02; Kohl’s Corp., 4.4 percent to $20.83, and Simon Property Group Inc., 4.2 percent to $62.28.

In tech, shares of Amazon shot up 6.2 percent to $3,241.16 as Facebook gained 8.3 percent to $287.38.

Kingsview’s Nolte said the market was now betting on a kind of status quo with no big new stimulus package and also none of the inflation it would have brought. 

“You’re not going to get the radical right and you’re not going to get the radical left, like, ‘OK, this is the new world order,’” he said. 

But consumer spending is going to mirror the economy, he said, noting people who depend on service jobs would feel strained as Americans stay closer to home to social distance. 

“We’re still making stuff because people are buying stuff, but we’re not going anywhere — and that’s the service side,” he said. 

For now, there are enough people stuck at home and spending to give merchants some hope for the holidays and they are expected to keep buying through an extended vote count (and probably recount).

Adobe Analytics said the the rush to the polls had only a “muted impact on online shopping” on Election Day.

The group analyzed more than one trillion visits to U.S. retail e-commerce sites and 100 million stockkeeping units and found U.S. shoppers spent $2 billion on Tuesday, a 27 percent increase from a year earlier. Adobe forecast that online sales would total $16 billion this week, although spending has tended to drop the day after people go to the polls. 

Still, the election could change the tenor of the holiday season. 

An accompanying survey by Adobe of 1,000 consumers found that 26 percent said the outcome of the election would impact their holiday spending and 63 percent of retailers believe shoppers will be “more confident” after the election.

Craig Johnson, president of Customer Growth Partners, said: “We have seen no evidence that a contested or drawn-out election will significantly affect shopping patterns, from shopping behavior as recently as this weekend, and no mention of it in our customer interviews as a factor in buying decisions, so we are not adjusting our pre-season holiday forecast of plus-5.8 percent. This assumes that an uncertain outcome doesn’t extend past Christmas, but is nearer to the 37 days in Bush-Gore 2000 — when we saw no evidence of Christmas shopping behavior changes.”

As of now, the rest of the world can just watch drama unfold in the U.S., where Biden projected calm and confidence and Trump — who has made falsehood a cornerstone of his administration — tried to declare victory, although no independent organization has called the election and votes were still being counted in key states.

The strongest performance in Europe came from the DAX in Frankfurt, which rose 2 percent to 12,324.22, and the CAC 40 in Paris, ahead 2.44 percent to 4,922.85.

Among the gainers were LVMH Moët Hennessy Louis Vuitton, up 3.1 percent to 421.80 euros; Hermès International, 2.9 percent to 833.40 euros; Kering, 1.8 percent to 553.20 euros, and Burberry Group, 1.1 percent to 14.29 pounds.

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