Updated from 12:22 p.m. EDT
Retail stocks rose sharply Tuesday on a report that showed consumer confidence was better than expected this month, rising to its best level in eight months.
The Conference Board said its consumer confidence index surged to a reading of 54.9 in May from 40.8 last month, coming in well above the consensus estimate of 42.6. The index is now at its highest level since September, when it sat at 61.4. Much of the improvement came thanks to the expectations index, which rose to 72.3 in May from 51.0 the previous month.
"Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months," said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement. "While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."
Ian Shepherdson, chief economist with High Frequency Economics, said the consensus forecast of 42.6 "looked conservative in the light of the leap in the
University of Michigan survey but this is a much bigger jump than we expected."
"The expectations index in this survey tends to drop further than the Michigan number in extreme circumstances, such as the Lehman failure, and now it is bouncing back," Shepherdson said in an email. "After this number, the gap between them is almost closed."
Department stores were up on the consumer confidence report.
spiked 12.2% to $10.60,
gained 7% to $43.80,
rose 6.5% to $26.76, and
climbed 5.9% to $11.85.
was up 4.1%,
was higher by 1.5%, and
Consumer discretionary names were also strong.
American Eagle Outfitters
was higher by 6.6%,
was up 6.3%,
Abercrombie & Fitch
added 3.8%, and
Other winners included
Polo Ralph Lauren
, which was up 8.7% to $54.38, and
, better by 6.1% to $13.85.
The S&P Retail Index shot up 4% to 325.78.
Staff writer Jeanine Poggi contributed to this report.