Retail stocks dip; Fed injects fund to aid growth

By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — Retail stocks turned lower Wednesday afternoon after the U.S. central bank said the economic recovery has been “disappointingly slow.”

While leaving its benchmark interest rate unchanged, the Fed said it will start a new program to buy $600 billion in Treasurys through the end of June 2011 to lift the economic growth. Even though doubts persist about whether the plan will work, economists said they feel the Fed had little choice but to act. See story on the Fed action.
Investors’ worries about the economy and the near-10% jobless rate were not quelled either earlier in the day by the latest ADP report, which showed higher-than-expected private-sector job growth in October. Read more about the ADP data.

The S&P Retail Index /quotes/comstock/10u!i:rlx (RLX 471.42, +6.25, +1.34%)  fell 0.8% to 467.76.

Sector sentiment also was jittery ahead of retailers’ October same-store-sales reports, which will mostly be released Thursday. Halloween sales may not do the trick for retailers.

Retail giant Wal-Mart Stores Inc. /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 54.67, -0.12, -0.22%)  declined about 0.8%.

Among the gainers, shares of shoe retailer DSW Inc. /quotes/comstock/13*!dsw/quotes/nls/dsw (DSW 34.97, +1.39, +4.14%)   jumped 4.2% after the company raised its outlook for the year after its third-quarter same-store sales jumped 10%.

Shares of Walgreen Co. /quotes/comstock/13*!wag/quotes/nls/wag (WAG 35.20, +0.71, +2.06%)  rose 1.6% after the drugstore chain reported a 1.3% decline in October same-store sales, though its drop in nonpharmacy sales was smaller than Wall Street expected.

Analysts had been looking for Walgreen’s same-store sales to decline 0.5%, according to Retail Metrics. Comparable pharmacy sales dropped 1.6%, and nonpharmacy same-store sales slipped 0.8%, hurt by a decline in customer traffic. Total sales rose 3.7% to $5.85 billion, helped by the purchase of the Duane Reade drugstore chain.

Rival CVS Caremark Corp. /quotes/comstock/13*!cvs/quotes/nls/cvs (CVS 30.77, +0.24, +0.77%)  shares added 0.5% after the company’s third-quarter per-share profit came in 1 cent ahead of the consensus of analysts surveyed by FactSet Research. The company, however, cut the top end of its full-year profit forecast. See story on CVS results.

Nike Inc. /quotes/comstock/13*!nke/quotes/nls/nke (NKE 81.77, +0.02, +0.02%)  shares fell 0.6%. Late Tuesday, the athletic-shoe giant named Carl Grebert, who has been with the company for 13 years, as its vice president and general manager of Nike Japan.