Please ensure Javascript is enabled for purposes of website accessibility

Why Nordstrom Stock Was Gaining Today

By Jeremy Bowman – Updated Sep 5, 2019 at 11:39AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An ease in trade tensions helped lift the department store chain.

What happened

Shares of Nordstrom (JWN 7.84%) were moving higher today, rising in tandem with the broader market and the retail sector on news that the U.S. and China had scheduled trade talks for early October.

There was no direct news out on the high-end retailer, but the stock was up 6.2% nonetheless as of 10:50 a.m. EDT, since it's proven to be one of the retail stocks that are more sensitive to tariff-related news. At the same time, the S&P 500 was up 1.4%, and the SPDR S&P Retail ETF (XRT 4.60%) had gained 3.4%.

A digital image of the new Nordstrom store in New York.

A mock-up of the new Nordstrom store in New York. Image source: Nordstrom.

So what

Retail stocks, including Nordstrom, have been whipped back and forth by developments in trade talks between the U.S. and China as the news seems to change every week. Today, it was a positive development, though any shift in the relationship has almost always been fleeting.

China said this morning that it would send trade representatives to Washington in early October to hold high-level trade talks after a successful phone call between officials from the two countries.

The news offers investors hope of a thaw in trade relations even as the U.S. placed 15% tariffs on one group of Chinese goods at the beginning of this month and plans to raise existing tariffs from 25% to 30% on Oct. 1.

Now what

The announcement is lifting Nordstrom stock, and at this point, the company can use all the help it can get. The stock has been battered as sales have suddenly slowed and growth has reversed, a sign that the retailer may be succumbing to the same forces in the changing sector that have buffeted its department store peers.

As a high-end retailer, Nordstrom would be more sensitive to a recession, which an inflamed trade war could cause, than some of its downmarket competitors. The company is also opening its flagship women's store in New York next month, expected to be its biggest by sales volume, and a downturn could spoil that highly anticipated opening.

Like most U.S. retailers, Nordstrom also imports a substantial percentage of its merchandise from China.

While a resolution to the trade war alone won't save the company, increasing tariffs are only going to make its chances at a recovery more difficult. Today's news is nothing worth celebrating, but for now, it's a step in the right direction for Nordstrom investors.

Jeremy Bowman owns shares of Nordstrom. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
JWN
$18.70 (7.84%) $1.36
SPDR Series Trust - SPDR S&P Retail ETF Stock Quote
SPDR Series Trust - SPDR S&P Retail ETF
XRT
$60.47 (4.60%) $2.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.