New record for Russell 2000, Dow Jones Industrial Average
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) closed at new record highs on news of better-than-expected U.S. retail sales for June. The small-cap index added 15.21 points, or 1.81%, to a new record close of 855.18. The Dow gained 283.86 points, or 2.09%, to record close of 13,861.73. Both indices previously set records on June 4.
Stocks took off as if shot out of a cannon today following news that U.S. retailers largely defied pessimistic predictions and posted modest gains in June. Bentonville, Ark.-based giant Wal-Mart Stores Inc. (NYSE: WMT) led the way, easily outpacing analysts’ projected same-store sales numbers.
That’s good news, suggesting that the American consumer is willing to spend despite higher gas prices. Retail sales make up about half of consumer spending, which in turn comprises the bulk of gross domestic product.
However, department stores such as Macy’s Inc. (NYSE: M) and J. C. Penney Company Inc. (NYSE: JCP) reported a decline in June comparable-store sales.
Investors also reacted positively to news that aluminum producer Alcan Inc. (NYSE: AL) has accepted a $38.1 billion offer from British mining company Rio Tinto, thus putting to rest a hostile bid by Pittsburgh, Pa.-based rival Alcoa Inc. (NYSE:AA).
Elsewhere, the U.S. trade deficit in May increased to $60.04 billion from $58.67 billion in April, according to the Commerce Department. That’s what economists were expecting. Exports added 2.2% to $132.03 billion, but imports increased 2.3% to $192.07 billion.
More good news came on the employment front, where the U.S Labor Department reported that jobless claims for the week ended July 7 fell 12,000 to a seasonally adjusted rate of 308,000. Observers were projection a smaller decline of 3,000.
Among specific small-cap companies:
Shares of McMoRan Exploration Co. (NYSE: MMR) found the right direction, gaining $1.55, or 10%, to finish at $16.56, on news of an oil discovery in the Gulf of Mexico. Drilling close to the South Marsh Island encountered a total of 189 net feet of hydrocarbon bearing sands in five zones, the New Orleans oil and natural gas explorer said after the start of trading. The company intends to drill deeper into the Flatrock well and expects to begin production soon.
Naperville, Ill.-based specialty retailer Factory Card and Party Outlet Corp. (Nasdaq: FCPO) saw its net sales for the five-week period ended July 7 fall to $23.5 million, a decline of 2.4%, compared with $24 million a year earlier. Same-store sales fell 0.1% from a year ago, the maker of greeting cards said before the start of trading. Still, shares gained $0.13, or 1%, to close at $9.07.
Shares of India-based Sify Ltd. (Nasdaq: SIFY) ended the day in positive territory, up $0.10, or 1%, to $10.25, following news the provider of Internet solutions has joined forces with Microsoft Corp. (Nasdaq: MSFT) in India. The first step will be for the Sify Internet café chain to offer its subscribers access to licensed Microsoft Office software, the company announced after the opening bell. The partnership will also include increasing Indian families’ access to education by providing children with computers and Internet access.
