Cautious start watching Washington news
Small-cap stocks hovered near steady levels on the opening, outperforming the Dow and S&P 500 early on as investors took a cautious stance waiting on a smorgasbord of news events out of Washington today. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was up 0.60, or 0.13%, at 468.54.
Investors are waiting for the final rollout of the bank bailout plan today from Treasury Secretary Timothy Geithner, although quite a few of the details have started to leak out. Bank stocks were lower to start things today, but have been in rally mode lately in anticipation of the news.
In addition to the bank rescue plan, the market is waiting to hear about the Senate vote on the Obama Administration’s stimulus bill. A vote is expected at some point today, possibly in the midday time frame. Last night President Obama addressed the nation to talk about the plan and to implore Senate Republicans not to take a hard partisan stance.
As if all that wasn’t enough, the market also will get a chance to respond to Federal Reserve Chairman Ben Bernanke, who will testify about the financial crisis today before the House Financial Services Committee. Bernanke headlines will likely start to flow around 1:00 p.m. ET.
There were a couple of minor economic reports out this morning, with the Johnson Redbook chain store sales report up 0.5% for February-to-date numbers. Meanwhile, the wholesale inventories report came in at minus 1.4%, which was a bigger drop than forecast. Neither report appeared to have much of an impact on the market, as investors are much more preoccupied trying to decipher whether or not the bank bail out and fiscal stimulus plans will spark a rally in the market.
One area of strength today came from the energy arena, with energy stocks up about 0.6% shortly after the open. Energy shares gathered some support from a rally in crude oil prices, which climbed about $1.60 a barrel amid talk from OPEC leaders that they will further curb production if crude doesn’t remain above $40.
Elsewhere on the commodities front, copper prices were slumping in London trading, and copper stocks took a hit in Asia, which is a concern because copper is a key ingredient in building and is seen as an economic barometer. That said, Asian stocks were mixed, with China shares finding support as inflation data eased and supported hopes for a rate cut out of the central bank.
Individual small caps on the move early today include Skilled Healthcare Group Inc. (NYSE:SKH), which gapped higher and was up 16%, receiving an earnings-related boost. Flamel Technologies SA (Nasdaq:FLML) rose 9% as the French biopharma firm climbed to the highest level since early December without any apparent fresh news behind the move. SuccessFactors Inc. (Nasdaq:SFSF) climbed 11% as the management solutions software firm reported earnings. On the downside, Haynes International Inc. (Nasdaq:HAYN), gapped lower and tumbled 18% as the nickel and cobalt manufacturer took a hit after releasing quarterly results. Ladish Co. (Nasdaq:LDSH) fell 17% as the aerospace metals component maker also had an adverse reaction to quarterly figures.
Looking at the chart picture, the Russell has stalled in the shadow of the recent highs near 474 and needs to pop through that resistance zone or move back into a short-term bearish mode. For today’s action, look for support at 462.50, 461 and 454.50. On the upside, resistance comes in at 470, 474 and 481.
