Modest gains for small caps
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are rising despite generally bearish economic and financial news.
At 10:45 a.m. ET, the small-cap index was up 2.14 points, or 0.28%, to 758.27. The Dow Jones Industrial Average (INDU) had climbed 20.49 points, or 0.16%, to 13,227.76.
The day began with news before the start of trading that the U.S. economy grew at an annual rate of 4.9% during the third quarter, according to final figures released by the Commerce Department. The economy grew 3.8% in the second quarter.
The third-quarter growth was the fastest pace in four years, but many economists projected that growth will slow down markedly in the fourth quarter and into the first half of 2008 as the credit squeeze and falling home prices take their toll.
As the economy slows, the labor market will probably cool. Statistics released before the opening confirm this.
The U.S. Labor Department said that jobless claims for the week ended Dec. 15 increased 12,000 to 346,000 from an upwardly revised level of 334,000 in the preceding week. The rise is greater than projected.
The four-week moving average, considered a more stable measure, showed an increase of 4,250 to 343,000. The level a week earlier was 338,750.
Elsewhere, investment bank Bear Stearns (NYSE: BSC) reported a quarterly loss of $854 million, or $6.90 per share, compared with net income of $563 million, or $4.00 per share, a year earlier.
The New York-based company was one of the first to feel the pain of the meltdown in the subprime mortgage sector when two of its investment funds went belly-up this summer.
During the latest quarter Bear Stearns suffered $1.9 billion in write-downs due to bets made on securities backed by subprime mortgages. The figure is larger than the one it had previously forecast.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Electronic Clearing House, Inc. (ECHO), up 109% on news it will be purchased by Intuit Inc. (INTU) for $131 million.
• Pier 1 Imports, Inc. (PIR), up 33% on news of a narrowed third-quarter loss.
• Volt Information Sciences, Inc. (VOL), up 26% on news of a rise in fourth-quarter earnings.
Biggest percentage losers:
• Altus Pharmaceuticals Inc. (ALTU), down 39% on news it reacquired the development and commercialization rights from Genentech Inc. (DNA) for a growth hormone treatment.
• Amicus Therapeutics, Inc. (FOLD) down 34% despite news its drug candidate met the goals of midstage clinical trials.
• CPI Corp. (CPY), down 30% on news of a wider third-quarter loss.
