Inflation data lift Russell 2000, Dow
U.S. ended the week with large gains following news that core consumer inflation in May came in below expectations. The Russell 2000 moved up 11.07 points, or 1.32%, to finish at 848.19. The Dow Jones Industrial Average added 85.76 points, or 0.63%, to 13,639.48.
For this week, the Russell 2000 has gained 12.88 points, or 1.54%, while the Dow has added 215.09 points, or 1.73%.
The rally came on news that core U.S. inflation barely moved in May.
The core consumer price index, which excludes the cost of food and energy, increased just 0.1% in May, the U.S. Labor Department reported. Economists were projecting a rise of 0.2%. The core CPI has gained 2.2% compared with a year ago.
Overall, rising energy costs pushed U.S. consumer prices up 0.7% in May, the most since September 2005.
However, the core inflation figures show that higher energy costs have not spilled over into underlying inflation, which remains moderate. That’s a sign that the U.S. Federal Reserve will not look to raise the federal funds rate, which currently stands at 5.25%.
Among specific small-cap companies:
Shares of ChemGenex Pharmaceuticals Ltd. (Nasdaq: CXSP) ended the day in positive territory on a report that said the company’s leukemia drug showed positive results. An article in the publication Leukemia said the drug Ceflatonin leads to the reduction and even disappearance of a certain mutation associated with chronic leukemia, the Australian company said after Thursday’s close. Shares gained $1.24, or 11%, to close at $13.00.
New York City-based Atari, Inc. (Nasdaq: ATAR) will need more time to file its Annual Report on Form 10-K, which was due on Thursday, June 14, the video software developer said after Thursday’s close. The company explained that it has not yet finalized the amount of a goodwill impairment charge that will be reflected on its fourth quarter and year-end financial statements. It expects to complete its report in late June. Shares fell $0.26, or 8%, to settle at $2.98.
News that Cardinal State Bank (Nasdaq: CSNC) will be purchased by Yadkin Valley Financial Corp. (Nasdaq: YAVY) sent its stock surging $4.29, or 34%, to close at $16.95. Durham, N.C.-based Cardinal State will change hands for $41.8 million, or $17.62 per share, the two companies said before the start of trading. According to the terms of the deal, 42% of Cardinal's outstanding shares will be exchanged for stock of Yadkin Valley Financial and 58% will be exchanged for cash.
