Retail Stocks Drop Amid Trade War Concerns

By Andria Cheng

Retail stocks followed the broader markets lower on Monday amid concerns about the prospect of a trade war between the U.S. and China, where retailers from Wal-Mart Stores Inc. to J.C. Penney Co. make some of their goods.

The S&P Retail Index (RLX) fell 0.7% to 369.71.

During the weekend Washington imposed stiff tariffs on Chinese-made tires, leading to China saying it would launch an anti-dumping investigation into U.S. sales of chicken and auto products. Economists said any trade-related dispute between the two countries could have significant implications.

No. 1 retailer Wal-Mart (WMT), a Dow Jones Industrial Average component, recently fell 0.65% to $50.39.

Department store operator J.C. Penney (JCP) was down 1.84%. Among other decliners, Nordstrom Inc. (JWN) shares declined 1.23%. Kohl's Corp. (KSS) fell 1.61%.

Electronics retailer Best Buy Co. (BBY) was recently up 0.1% ahead of its earnings release on Tuesday. While overall consumer electronics trends remained quite weak in the second quarter, Best Buy likely saw a moderate rebound toward the end of the quarter as a slightly better-than-expected back-to-school with strong relative PC sales partially offset tough comparisons and a weak discretionary environment, said analyst Colin McGranahan of Sanford C. Bernstein & Co.

-Andria Cheng; 415-439-6400; [e-mail]