Russell 2000 continues to sizzle
The Russell 2000 (NYSE:IWM) is maintaining strong gains on news of lower-than-expected March inflation earnings from major banks. At 2:19 p.m. ET, the small-cap index had added 14.99 points, or 2.17%, to 707.05. The Dow Jones Industrial Average was up 163.74 points, or 1.32%, to 12,526.21.
Stocks small and large are rallying on news before the opening that consumer prices rose 0.3% in March, below the projected 0.4%. The same report by the U.S. Labor Department also showed that core prices, which exclude the costs of food and energy, added 0.2%, as expected.
“Typically, when the economy goes into recession we see inflationary pressures ease, but there is a significant lag,” said Arun Raha, vice president of economic research and consulting for the North American operations of reinsurance company Swiss Re, in an email. “Today’s CPI numbers reinforce that trend. Inflationary pressures have not yet eased, even with the sharp slowdown in economic activity.
Contributing to the bullish sentiment is news before the opening that financial services giant JPMorgan Chase & Co. (NYSE:JPM) reported a first-quarter profit of $2.4 billion, half the $4.8 billion it earned a year earlier but a good result in light of the ongoing credit squeeze.
Small-cap banks are also seeing their shares rise. Little Rock, Ark.-based Bank of the Ozarks, Inc. (Nasdaq:OZRK) is up 2%, while Simmons First National Corp. (Nasdaq:SFNC), which owns eight community banks across Arkansas, is up 4%. Meanwhile, shares of Southside Bancshares Inc. (Nasdaq:SBSI) have gained 6%.
Railroad companies are currently the best-performing industry group. Among the winners is railcar maker FreightCar America, Inc. (Nasdaq:RAIL). Shares of Pittsburgh, Penn.-based Portec Rail Products, Inc. (Nasdaq:PRPX) are also in the green.
