A retail sector exchange traded fund rose more than 1% Tuesday despite the sell-off in shares of holdings Talbots (NYSE: TLB) and Pep Boys (NYSE: PBY).
Retail HOLDRS (AMEX: RTH) added 1.1% at last check even though Talbots shares plunged nearly 40% and Pep Boys slid almost 20%.
Investors punished Talbots after the women’s clothing retailer reported disappointing results and forecast further weakness in sales.
Separately, automotive service chain Pep Boys after Monday’s closing bell was out with quarterly earnings that missed Wall Street expectations.
The retail sector ETF is fractionally negative so far in 2011.
Weak manufacturing and jobs reports are raising concerns about the health of the economic recovery.
“One of the groups that we believe is most vulnerable to the slowdown is the consumer discretionary sector, and more specifically U.S. retailers,” said Russ Koesterich, iShares global chief investment strategist.
“With the possible exception of very high end consumers, consumption is likely to continue to slow with the economy. Retail stocks are not priced for this slowdown, and if anything appear expensive relative to the broader market,” he wrote in a blog. “We therefore maintain our underweight view of this group.”
Retail HOLDRS
