Inflation fears down small caps
The Russell 2000 (NYSE: IWM) is falling on news that U.S. producer prices for November increased the most in three decades.
At 10:44 a.m. ET, the small-cap index had lost 8.87 points, or 1.15%, to 762.84. The Dow Jones Industrial Average (INDU) was off 55.52 points, or 0.41%, to 13,418.38.
Producer prices, the prices received by domestic producers for their output, jumped 3.2% in November, the U.S. Labor Department reported before the start of trading. The increase, the biggest since 1973, was partially attributed to a 14.1% surge in the price of energy goods.
Producer prices increased 0.1% in October. Prices are up 7.2% on a year-to-date basis.
The core producer price index, which excludes food and energy, added 0.4%.
Both figures are well above what economists were expecting, which raises fears of inflation. An increase in inflation makes it less likely that the U.S. Federal Reserve will move to lower interest rates.
Stocks opened with a drop as investors focused on the producer price index and disregarded news that U.S. retail sales for November were surprisingly strong.
The Census Bureau reported before the opening that retail sales increased 1.2% to $385.8 billion. That’s beyond the projected increase of 0.6%. Retail sales in October rose 0.2%.
Economists were expecting consumer spending, which is about 70% of gross domestic product, to slow due to falling home prices and high energy costs.
Elsewhere, jobless claims for the week ended Dec. 18 fell 7,000 to 333,000, according to a separate report by the Labor Department. The preceding week’s total was an upwardly revised 340,000.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Rigel Pharmaceuticals, Inc. (RIGL), up 108% on news its treatment for rheumatoid arthritis demonstrated good results in a clinical trial.
• Saifun Semiconductors Ltd. (SFUN), up 8% on news that Spansion Inc. (SPSN), which is taking over the company, will give Saifun shareholders an extra $31.4 million.
• Cynosure Inc. (CYNO), up 6% on news of an analyst upgrade.
Biggest percentage losers:
• Neurocrine Biosciences, Inc. (NBIX), down 46% on news the U.S. Food and Drug Administration needs more data on its insomnia drug.
• Amtech Systems, Inc. (ASYS) down 26% on news that fourth-quarter results missed expectations.
• Select Comfort Corp. (SCSS), down 24% on news it expects softer fourth-quarter sales.
