The gauge of 30 retailers gained 2.4 percent to 557.26 at 4 p.m. in New York, the highest level in records from September 1989. Kohl’s advanced 6.8 percent, the most in the S&P 500, to $55.65 after its June same-store sales increased more than twice the Retail Metrics Inc. estimate. Target, the second-largest U.S. discount retailer, rose 6.7 percent to $51.67 after also posting sales that beat forecasts. Urban Outfitters Inc. (URBN) surged 6 percent to $32.58 after Morgan Stanley advised buying the shares.
Retailers in the S&P 500 trade for 20.3 times reported earnings, or 31.9 percent more than the valuation for the benchmark index, according to data compiled by Bloomberg. When the premium reached 32.2 percent in January, it was the highest since 2002.
“The market is predicting that the consumer will be fine in the future,” said Tim Hartzell, who oversees about $350 million as chief investment officer for Houston-based Sequent Asset Management. “The price goes up while earnings lag because the market knows that the early cyclicals are these retailers,” he said. “They’re fully priced and there’s really no more upside.”
U.S. companies added 157,000 workers to their June payrolls, more than double the number forecast in a Bloomberg News survey, ADP Employer Services reported today. The Labor Department said first-time applications for unemployment insurance fell last week. June sales were also helped by a drop in gasoline prices. Gas in the U.S. has declined 10 percent from a high of $3.99 a gallon on May 4, according to AAA.
Shares of Gap Inc. (GPS), the largest U.S. apparel retailer, increased 5.2 percent to $19.28 after sales increased 1 percent, beating the average projection for a decline of 2.4 percent.
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