Lower in choppy trade
Small-cap stocks climbed back from a morning slide, and made a secondary run at positive territory before gravitating slightly lower at mid-session as a rally in energy and homebuilder stocks was offset by losses in financial and airline shares. At 1:01 p.m. ET, the Russell 2000 (NYSE:IWM) was down 1.40, or 0.24% at 504.63.
Looking at sector activity so far today, the top performers were coal, metal and mining stocks, office electronics, wireless telecoms, automobile manufacturers, casinos, oil exploration, oil production, oil refiners, homebuilders and gas utilities. On the downside, real estate services, diversified banks, airlines, gold, satellite firms and regional banks were among the worst performers.
Crude oil prices rose to a three-week high earlier today and even though prices edged off that intraday peak the market retained a bid as Israeli forces continued the assault on the Gaza Strip and amid a dispute between Russia and Ukraine on gas supplies. Energy stocks were a primary upside force today for equities, with the Energy Select Sector SPDR Fund up 2.1% at midday.
Even though several commodity groups (like coal and mining shares) were doing well today, commodities in general were basically flat, with the Commodity Research Bureau Index up just 0.17%. Some pressure on commodities was likely stirred by a rally in the dollar, which was up a whopping 2.4% versus the euro. Many commodity markets are priced in dollar terms, so a rise in the greenback can stunt demand for physical goods. One market apparently feeling that pinch was gold, which slumped 3% and pulled down gold stocks.
Homebuilder stocks were making a solid upside push today, likely supported by news that the New York Federal Reserve started buying mortgage-backed securities today, which should weigh on mortgage rates and help fuel refinancing and homebuilding activity. The ISE Homebuilders Index was up 4% at midday, with small-cap firm Lennar Corp. (NYSE:LEN) up 5.7%.
General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F) were both higher as monthly vehicle sales numbers trickle in today. Ford said that its market share rose in December for the third consecutive month for the first time in 11 years. The market was anticipating dreadful vehicle sales reports today, so the expectation bar was already set quite low.
Airline stocks were in a defensive posture, pressured by the rising tide in crude oil prices. The AMEX Airline Index was down 1.5% at mid-session, with small-cap carriers US Airways Group Inc. (NYSE:LCC) off 3.8% and UAL Corp. (Nasdaq:UAUA) off 5%.
Individual small-cap stocks on the move today include Atlas Pipeline Holdings LP (NYSE:AHD), which jumped 33% on the best volume seen in this stock in months. OSG America LP (NYSE:OSP) rallied 24% as the petroleum barge transporter climbed to the highest point since late October. On the downside, RC2 Corporation (Nasdaq:RCRC) was off 24% after Fisher-Price inked a deal as a global licensee for Thomas & Friends train product line, but the deal did not include the wooden track system rights, which remain with RCRC. Real estate investment trust firm Transcontinental Realty Investors Inc. (NYSE:TCI) slipped 12% in light volume to the lowest point since early October.
Looking at the chart picture, today’s choppy activity was nothing special, but the rejection of a morning slide back below 500 was a nice sign if it holds up through the close. The market is in a sideways consolidation mode, with a modest upside bias after climbing back above the 50-day moving average last week for the first time since the collapse began back in mid-September. Through the afternoon, resistance comes in at 514.50, while support is at 496 and 491.
