Retail Sector Stocks Rise Amid Rate Cut Hopes

Major U.S. equities indexes pushed higher at the top of the new trading week, bouncing back from declines posted ahead of the weekend. Although weaker-than-expected jobs data released on Friday raised concerns about the resilience of the economy, the slowdown in hiring and uptick in unemployment could add to the case for upcoming interest-rate cuts by the Federal Reserve.

The S&P 500 gained 1.5% on Monday, ending a streak of four consecutive negative trading sessions. The Dow also clawed back from Friday’s sell-off, adding 1.3%, while the Nasdaq climbed around 2%. 

Shares of animal health company IDEXX Laboratories (IDXX) secured the top performance in the S&P 500 on Monday with a surge of more than 27%. The provider of diagnostics tools and other equipment for veterinary laboratories topped sales and profit estimates for the second quarter and lifted its full-year forecasts, citing strong demand for a recently launched product that analyzes samples from animals’ ears. William Blair analysts said IDEXX could also benefit from an aging pet population driven by accelerated pet adoptions during the pandemic.

Growing expectations that the Fed will move to lower interest rates, which would lower the cost of borrowing for consumers, helped underpin gains for various retail stocks. Shares of kitchenware and home furnishings specialist Williams-Sonoma (WSM) jumped 6.9%. Shares of Tapestry (TPR), the fashion holding company behind the Kate Spade and Coach brands, advanced 5.3%.

PG&E (PCG) shares gained 6.5%, recovering from losses posted late last week after the California-based power utility reported a year-over-year revenue decline for the second quarter, falling short of expectations. However, CEO Patricia Poppe said the energy provider could be in a position to reduce customer bills within the next couple of years as it executes its growth plans. PG&E also said it does not intend to issue additional equity to fund its spending plans, regardless of the outcome on potential state legislation on wildfire prevention and customer billing that could affect utilities in the Golden State.

Shares of analog and power management chipmaker ON Semiconductor (ON) fell the furthest of any S&P 500 stock on Monday, plummeting nearly 16%. Although Onsemi matched adjusted profit estimates and edged ahead of quarterly sales expectations, revenue was down from a year ago. The company pointed to cautious behavior by its customers, high levels of uncertainty in its key automotive market, and softness in Europe and North America.

Paramount Global (PARA) announced that David Ellison will take the reins of the combined company following the completion of the merger later this week between Paramount and Ellison’s Skydance Media. Meanwhile, Tom Ryan is set to step down from his role as president and CEO of Paramount Streaming. Paramount Global shares tumbled 5.4% on Monday.

LyondellBasell Industries (LYB) shares dropped 4.7%, extending losses posted Friday after the producer of plastics, chemicals, and fuels reported lower-than-expected profits for the second quarter. Although revenue came in ahead of expectations, LyondellBasell outlined a strategic plan including asset sales in an effort to optimize its portfolio in response to challenging market conditions.