Flat amid competing cross-currents
Small-cap stocks hovered near steady levels in early trading, with pressure from weak corporate profit news countered by bargain hunting, overseas gains and a private employment report that wasn’t as bad as feared. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 0.26, or 0.06% at 452.64.
The ADP Employment Survey reflected a loss of 522,000 jobs from non-farm payrolls and projected the Labor Department report Friday would show a decline in jobs of 525,000, which was slightly above the median forecast of 500,000. That said, the market took the ADP figures in stride, with a “it could have been much worse” mentality in play. It’s worth noting that the ADP report was veering way offline for many months before they shifted methodology last month and got back on a tighter track with the Labor Department survey.
In overseas trading, European shares pushed higher despite disappointing December retail sales. The gains were a little dynamic in Asia, where Chinese shares climbed 2.7% as the government started to release funds for stimulus programs and Indonesia cut interest rates. Tech stocks, electronics makers and auto stocks were among the better performers in Asian trading overnight.
Here in the United States, much of the individual corporate profit news was gloomy this morning, including disappointments from The Walt Disney Co. (NYSE:DIS), Costco Wholesale Corp. (Nasdaq:COST) and Time Warner Inc. (NYSE:TWX). Shortly after the open, DIS was off 5.8%, COST down 8.1% and TWX off 3.1%.
Crude oil prices were up modestly into the stock market open, pulled higher by talk of further production cuts out of OPEC. In overnight trading, commodity and mining stocks were on the defensive, possibly reflecting a nice rally in the U.S. dollar, which was up 1.4% against the euro this morning.
Individual small caps of note this morning included RadiSys Corp. (Nasdaq:RSYS), which gapped higher and jumped 23% as the communications networking firm got an earnings boost. Bulk shippers were well represented at the top of the percentage mover boards today; Eagle Bulk Shipping Inc. (Nasdaq:EGLE) was up nearly 15%, Genco Shipping & Trading Ltd. (NYSE:GNK) was up 11% and DryShips Inc. (Nasdaq:DRYS) was up 13%. On the downside, Littlefuse Inc. (Nasdaq:LFUS) gapped lower and was off 13% as the industrial component maker took an earnings-related hit.
The chart picture for small caps shows that the Russell has nestled into another trading range, punctuated by moderate to light volume. The push back above 450 on Tuesday was a supportive signal, and the overall trading range pattern has a mild upside bias because of higher recent lows. For today’s session, look for resistance at 459 and 466, while support is 445.50, then at 439.
