Financial thoughts

Retail stocks fell on Thursday as analysts said a proposed $150 billion U.S. economic stimulus package aimed at averting a recession will provide little relief for struggling retailers and cash-strapped consumers.

The White House and Congress reached a tentative deal that would grant individuals a maximum rebate of $600 and married couples up to $1,200, plus $300 per child. House of Representatives Speaker Nancy Pelosi, a Democrat, vowed further action if needed to boost the economy.

With consumers grappling with high debt, rising food and fuel costs, and negative savings, the proposed stimulus package would not do enough to spur flagging consumer spending, said Howard Davidowitz, chairman of New York-based retail consulting firm Davidowitz & Associates Inc.

“Everybody recognizes that the stimulus is not going to do anything on a permanent basis. It’s just a drop in the bucket,” he said.

“When you look at someone who’s put nothing down on a house and now has negative equity, do you really think this addresses any of these issues?”

Retail stocks, meanwhile, lost some of the gains made following the Federal Reserve’s move on Tuesday to cut the fed funds rate by 75 basis points.

The Dow Jones U.S credit scores. Retailers Index .DJUSRT fell 1.5 percent while the Standard & Poor’s Retailing Industry Group Index lost 1.2 percent.

Shares of Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) closed 2.4 percent lower. Family Dollar Stores Inc (FDO.N: Quote, Profile, Research) fell 5.4 percent, Circuit City Stores Inc (CC.N: Quote, Profile, Research) was off 1.4 percent and Target Corp (TGT.N: Quote, Profile, Research) dropped 2.7 percent. 

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