Profit-taking mentality in play
The Russell 2000 (NYSE:IWM) stumbled on the opening, unable to extend the big rally from Wednesday’s action. At 10:05 a.m. ET, the Russell was down 7.60, or 1.06%, at 705.79 as a profit-taking mentality from those who caught the rise Wednesday dominated early action.
As the market progresses today, it will be important for the Russell to find support above the old swingline at 700. If the selling pressure begins to intensify, 695 is the next support zone to watch. Any move back into the green would be an important show of resilience as the market has been unable to sustain upside momentum after 3% rally days so far this year.
The market remained under pressure after the Philly Fed survey, which came out at 10:00 a.m. ET, was down 24.9%, quite a bit worse than the market forecast of a 15% loss. The sobering Philly Fed numbers overshadowed the Leading Indicators report, which rose 0.1%, in line with expectations.
Ahead of this morning’s opening, the Weekly Claims report was relatively close to the forecast, and quickly fell off traders’ radar screens, especially ahead of the Philly Fed and Leading Indicator reports.
With crude oil tipping the scales at fresh record highs this morning near $115 dollars a barrel and gasoline pump prices climbing before we’ve even reached the summer driving season, investors were unwilling to buy into the strength from Wednesday.
Most of the early individual stock focus this morning was centered on IBM (NYSE:IBM), Merrill Lynch (NYSE:MER) and Pfizer (NYSE:PFE). IBM represented the good, as the tech bellwether topped earnings forecasts; Merrill was the bad after missing the estimate amid subprime mortgage writedowns; and Pfizer was the ugly, as the largest drug maker tumbled to March lows and was fast approaching levels not seen since Viagra commercials hit TV screens several years ago.
Within the small-cap spectrum, big morning moves were seen in Avant Immunotherapeutics, Inc. (Nasdaq:AVAN), which shot 33% higher as Pfizer agreed to license the firm for a brain cancer experimental vaccine. Also on the upside was Fuqi International (Nasdaq:FUQI), lifted 18% by earnings results and Avocent Corporation (Nasdaq:AVCT), which was up about 20% in early trading, also with earnings above forecast.
On the downside, Epicor Software Corp.(Nasdaq:EPIC) tumbled 28% amid soft earnings, and Amcore Financial (Nasdaq:AMFI) was down about 23% after reporting a loss in the first quarter.
