Late rally lifts small caps
A strong rally in the last hour of trading lifted the Russell 2000 (NYSE: IWM) and the other major U.S. indices in the green. The small-cap index rose 7.26 points, or 1.03%, to 712.12. The Dow Jones Industrial Average (INDU) added 146.24 points, or 1.16%, to 12,735.31.
On a year-to-date basis, the Russell 2000 has lost 7.04%, while the Dow is down 3.99% and the S&P 500 has declined 4.03%.
An uneven day of trading ended on a bullish note as investors went hunting for bargains late in the session.
Small-cap stocks had no clear direction much of the time, as the bears and bulls struggled and sought to gain a perspective on the state of the U.S. economy. The Russell 2000 spent the early morning near the flat line but slipped and fell at about 11:30 a.m. ET. It bottomed out shortly after 2 p.m. ET as investors reacted to news that Goldman Sachs Group Inc. (NYSE: GS) is predicting a recession.
The New York-based investment bank wrote in a note to its clients that it expects gross domestic product to decline in the second and third quarters, prompting the Fed to keep lowering the federal funds rate until it hits 2.5%.
The federal funds rate, the rate at which commercial banks make overnight loans to each other, currently stands at 4.25%.
News of the report empowered the bears and the Russell 2000 briefly dipped to 689 points, a level it has not seen in more than one year.
However, William Poole, president of the Federal Reserve Bank of St. Louis, does not see a recession.
“It is too early to tell right now,” Poole told the Financial Planning Association of Missouri and Southern Illinois in a speech today.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• ICF International, Inc. (ICFI), up 19% to $26.31 on news of an analyst upgrade to $26.31.
• Helicos BioSciences Corp. (HLCS), up 18% to $12.44 on news the company will collaborate with a researcher to study genetics.
• Orion Energy Systems, Inc. (OESX), up 18% to $20.25.
Biggest percentage losers:
• Spectrum Control, Inc. (SPEC), down 31% to $9.76 on news that an analyst has reduced the stock’s target price.
• LSI Industries Inc. (LYTS), down 29% to $11.43 on news the company expects sales for the fiscal second quarter to be below Wall Street’s projections.
• Akeena Solar, Inc. (AKNS), down 19% to $9.86.
Volume leaders:
• Akeena Solar, Inc. (AKNS) 7,954,300 shares traded.
• AirTran Holdings, Inc. (AAI) 5,830,900 shares traded on news it launched a sale of cheap tickets for travel between Atlanta and all of its other destinations.
• Radian Group Inc. (RDN) 5,614,800 shares traded.
The day saw 199 small-cap stocks set 52-week lows, while three caps established 52-week highs.
