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Thursday, Feb 2, 2023

Stocks Mixed on Data, Hurricane Damage

Stocks ended the session mixed on Thursday after investors weighed reports of robust consumer spending along with slowing manufacturing momentum and news unfolding about the damage left in the wake of Hurricane Katrina.

The Dow Jones Industrial Average fell 21.97, or 0.2 percent, to 10,459.63. The Standard & Poor’s 500 Index rose 1.26, or 0.1 percent, to 1,221.59. The Nasdaq Composite Index dropped 4.19, or 0.2 percent, to 2,147.90.

The Commerce Department reported that while consumer spending rose by 1 percent in July, incomes edged up just 0.3 percent meaning people spent more than they earned. And the nation’s savings rate fell into negative territory for only the second time on record. Analysts blamed the discrepancy between spending and income on record-high gasoline prices driven by surging crude futures.

Gas prices were an area of focus as investors kept one eye on news throughout the day of the devastation caused by the hurricane that slammed into the Gulf Coast. Crude futures rose once again, with a barrel of light crude settling at $69.47, up 53 cents, on the New York Mercantile Exchange.

High gas prices didn’t keep consumers from stores and malls in August, as many of the nation’s biggest retailers, from warehouse clubs like Costco Wholesale Corp. to teen retailers such as Wet Seal Inc., reported surprisingly solid sales.

L.A.-based apparel and accessories company Guess Inc. said its comparable-store sales rose 6.4 percent for the four weeks ended Aug. 27, but its shares still ended down 4.4 percent to $20.67. Late Wednesday, Callanen International Inc. filed a lawsuit to stop Fossil Inc. from producing and selling Guess Inc. watches. Callenen, a subsidiary of Timex Corp., said its exclusive right to distribute Guess watches doesn’t expire until Dec. 31, 2006.

Shares of local restaurants fell after Raymond James analyst Bryan Elliott wrote in a note that the consumer fear of a U.S. gasoline shortage triggered by the reduced capacity of the oil refiners may lead to lower spending at restaurants. He cut the rating on 10 of 14 restaurant companies he covers. Among them, Cheesecake Factory Inc. dropped 3.9 percent to $30.44 after Elliott cut the Calabasas Hills-based company’s rating to “underperform” from “market perform”; California Pizza Kitchen Inc. dipped 3.8 percent to $28.47 on a downgrade to “outperform” from “strong buy”; and Ihop Corp. fell 1.1 percent to $39.73 on a downgrade of “market perform” from “outperform.”

The manufacturing sector also unexpectedly slowed down, as the Institute for Supply Management’s manufacturing index fell to 53.6 in August from 56.6 the month before well below economists’ median forecast of 56.5.


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