Stocks in the News: Hot Topic, Charlotte Ruse, Ruby Tuesday

The consumer may be starting to make a really slow comeback.

Shares of teen retailer Hot Topic Inc. (HOTT) were surging in pre-market trading after it forecast a first quarter profit of 1 to 2 cents per share, an improvement over its prior outlook for a 1-cent loss to a 1-cent profit. Strong sales of Twilight DVDs and accessories lead to a 7.1 percent rise in March same-store sales, beating analysts' forecasts calling for a 5.4 percent gain.

Clothing retailer Charlotte Ruse Inc. (CHIC), a retailer targeting young women, also is rising after the company posted an unexpected profit. Casual dining chains Ruby Tuesday Inc. (RT) and California Pizza Kitchen Inc. (CPKI) also posted strong results.

Meanwhile, shares of Wells Fargo & Co. (WFC) soared after the bank reported better-than-expected earnings. This is allaying investors' concerns about whether banks will pass the government's stress test.

Economists predict that consumer spending will rebound by the end of the year.

"Purchases will drop at a 0.5 percent pace from April to June and grow at an average 0.9 percent rate the next six months, according to the median of 51 projections in a survey taken from March 30 to April 8," according to Bloomberg News. "The estimated 0.5 percent first- quarter gain would break the longest slide since 1991."

That's the good news. The bad news is that unemployment is expected to top 10 percent before the end of the year. Business confidence remains shaky and the federal deficit is skyrocketing as the government loads up on debt to pay for the government's assistance to Wall Street.

Unfortunately, the economic recovery is not going to be a smooth one. For every up, there will be downs.


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