Stocks on the move: Retail stocks surge higher Tuesday

Better-than-expected retail sales figures in September sent several retail stocks higher on Tuesday.

The Census Bureau’s monthly retail sales report showed a 0.7% increase in retail and food services in September to $704.9 billion, exceeding the projected 0.3% increase. This is the sixth straight month of retail sales growth, showing the resilience of consumers in a time of inflation, high interest rates and a wobbly economy.

Year over year, September retail sales were up 3.8%. Sales by food service and drinking places were up 0.9% in September, while sales from general merchandise stores rose 0.4%, gas stations gained 0.9%, motor vehicle and parts dealers jumped 1%, and non-store retailers were up 1.1%. However, clothing stores and electronic/appliance stores saw their sales decline 0.8%.

Kohls, Under Armour lead the way

The strong retail sales report sent many retail stocks higher, placing them among the top performers on the market on Tuesday. Clothing retailer Kohl's (NYSE: KSS) and shoe and apparel manufacturer Under Armour (NYSE: UA) led the way, with both stocks up 6.6% as of Tuesday afternoon at around 2 p.m. Eastern.

Other top-performing retail stocks on Tuesday afternoon included Macy’s (NYSE: M), up 4.9%, Gap (NYSE: GPS), up 4.7%, Urban Outfitters (NASDAQ: URBN), up 4.6%, and Dollar Tree (NASDAQ: DLTR), up 4.5%.

Today’s good news aside, retail stocks are a mixed bag, as department-store chains like Macy’s and Kohl’s, despite surging today, are struggling mightily year to date, although they could offer attractive values. Meanwhile specialty clothing retailers like the Gap and Urban Outfitters are in positive territory on the year, up double-digits.

As always, investors should do their research on individual stocks and watch for upcoming earnings reports.

Wyndham and the big banks soar

One of the other top performers on Tuesday was Wyndham Hotels and Resorts (NYSE: WH), which spiked 8.8% today and is now up 5.4% year to date. The hotelier jumped on the news that its board of directors had rejected a proposal from Choice Hotels (NYSE: CHH) to acquire its outstanding shares at a nominal value of $90 per share, comprised of 45% in stock and 55% in cash.

The Wyndham board felt the offer was not in the best interest of shareholders, citing business and execution risks, an extended regulatory timeline, and potential franchisee churn, among other factors.

"Choice's offer is underwhelming, highly conditional, and subject to significant business, regulatory and execution risk. Choice has been unwilling or unable to address our concerns," said Wyndham board chair Stephen Holmes.

Several banks reported earnings Tuesday, and the biggest mover among them was Bank of New York Mellon (NYSE: BK), which jumped 4.1% Tuesday. The custody bank posted a 2% revenue increase, a 5% increase in adjusted earnings per share to $1.27, and a return on tangible common equity of 20%. Other notable bank movers on Tuesday were Keycorp (NYSE: KEY), which gained 3.2%, and Bank of America (NYSE: BAC), which climbed 2.3%.

Bank of America posted earnings on Tuesday that beat analysts’ expectations, with revenue up 3% to $25.2 billion and net income up 10% year over year to $7.8 billion, or 90 cents per diluted share. That beat estimates of 83 cents per diluted share. The surprisingly strong bank earnings for Bank of America, BNY Mellon, and those large bellwether banks that reported last week have buoyed many smaller banks across the industry.