Retailers Shed Baseless Gains

Sometimes, even the markets act rationally. Such is the case today, as investors realize May same-store sales will continue to be disappointing, and retailers are finally giving up their unfounded gains.

The S&P Retail Index fell 1% in morning trading to 340.11 after piling on more than 7% since the close on Friday.

Some of the morning's biggest losers included Williams-Sonoma(WSM Quote), which fell 7.5% to $13.60 after it maintained its cautious full-year outlook. The company managed to record a smaller-than-expected loss in the second quarter, but doesn't see much hope for a turnaround in the near-term.

Rite Aid(RAD Quote) also gave up several days of big numbers, falling 5.5% to $1.35, while rival CVS Caremark(CVS Quote) slipped 3% to $30.49.

In the department store sector, Macy's(M Quote) sank 4% to $13.37, Sears (SHLD Quote) slipped 1% to $66.42 and J.C. Penney(JCP Quote) fell 2% to $30.38.

OfficeMax(OMX Quote) tumbled 8.5% to $8.60.

Analysts expect May same-store sales results to still be negative, albeit better than April.

"Even with the earlier Memorial Day holiday somewhat easing comparisons, and materially warmer weather throughout most of the country, [May] should see another month of weak results, as consumers remain focused on value and compelling items," Eric Beder, analyst at Brean Murray Carret, wrote in a note on Monday.

There were a few sprinkles of green in the sector, most notably from Wal-Mart Stores(WMT Quote), which gained 2% to $50.95. In April, the big-box retailer announced it will no longer report monthly sales. Talbot's(TLB Quote) also saw some big gains, soaring more than 19% to $4.99, after it was upgraded by an analyst on the belief that it will soon sell its J.Jill chain.