Investors watching crude, company news in choppy trade
Small-cap stocks hovered near steady levels in choppy morning action, with support from last week’s impressive rally countered by profit-taking and unease toward the crude oil market. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 1.43, or 0.20% at 735.73.
Crude oil prices backed off the overnight highs into the stock market open, but remain in positive territory as traders were concerned that the military conflict between Russia and Georgia could disrupt oil transport through the Caspian region. Still, a mild upside push in crude oil this morning hardly takes the shine off last week’s collapse in energy prices, which highlighted a welcome pullback on the commodity inflation front.
A big part of last week’s bullish story revolved around a stunning appreciation in the U.S. dollar, which exploded against both the euro and the yen, reaching multi-month highs against worldwide currency products in the process. This morning, the greenback was tame, basically flat vs. the euro, and down about 0.3% against the yen.
Without any major economic data on the docket today, stock market investors should be free to focus on company news, macro trends and gyrations in commodities.
In China, stock prices took a 5.2% hit overnight, even though most of the Asia zone put together gains. Taiwan was up 1.6%, India up 2.2%, Japan up 1.9% and Australia up 0.8%. China assets have been struggling into the Olympics, with the Wisdom Tree Dreyfus Chinese yuan fund tumbling 2.1% since mid-July.
Among broad market sectors this morning, food distributors were on the rise, as were Internet retailers, tire and rubber firms, department stores and wireless telecoms. On the downside were fertilizer stocks, and metal and mining stocks. Industrial gases, steel, coal and aluminum shares were lower, continuing the trend from late last week.
Individual small-caps of note included AgFeed Industries Inc. (Nasdaq:FEED), which jumped 16% on strong quarterly earnings. Clear Channel Outdoor Holdings Inc. (NYSE:CCO) was up 10%, also lifted by earnings news. BMP Sunstone Corp. (Nasdaq:BJGP) rallied 10% following decent quarterly results. On the downside, Cardiome Pharma Corp. (Nasdaq:CRME), tumbled 30%, perhaps tied to FDA findings for a heart drug. Sterling Construction Co. Inc. (Nasdaq:STRL), was down 23% on sluggish earnings news.
As the day moves on, it will be important for small-caps to hold pullbacks above chart support near 726. If that point is violated with conviction, it would jeopardize the validity of last week’s upside breakout. Key support below 726 it at 720.50. On the upside, resistance for today is at 742 and 748. The eventual upside target drawn off Friday’s breakout is at 758.
