Russell 2000 drops on economic data
The small-cap index (NYSE: IWM) closed in the red on news of generally negative economic reports. The Russell 2000 lost 4.74 points, or 0.58%, to 806.11. The Dow Jones Industrial Average (INDU) dropped 3.33 points, or 0.02%, to 13,671.92.
On a year-to-date basis, the Russell 2000 has increased 2.37%, while the Dow has added 9.60% and the S&P 500 has gained 6.90%.
A volatile day of trading saw small-cap stocks switching from positive to negative territory as investors digested news of the latest economic reports and some earnings news.
The Russell 2000 futures were pointing to a moderately bullish opening following Motorola Inc.’s (NYSE: MOT) announcement that it swung to a third-quarter profit and released a better-than-expected outlook for the fourth quarter.
But small caps spent only a few minutes in the green after the opening, weighed down by news that orders for durable goods fell 1.7% in September, according to the U.S. Commerce Department. Economists were expecting a rise of 1.5% following a downwardly revised drop of 5.3% in August.
However, orders for non-defense capital goods excluding aircraft, a key measure of business investment, added 0.4% after a rise of 1.8% in August.
The major U.S. indices were down but started climbing when the Census Bureau announced that sales of new homes increased 4.8% to an annual pace of 770,000 in September, defying projections of a drop.
But a more careful look at the report emboldened the bears. The reading for September was 24% below the level a year earlier, while the numbers of August and July were revised downward.
“I would not read much into September's new home sales uptick,” said Arun Raha, vice president of Economic Research and Consulting for the North American operations of reinsurance company Swiss Re, in an email. “New home sales are between 12% and 15% of total home sales and builders have been heavily discounting to move inventory.”
Separately, the U.S. Labor Department reported that the number of U.S. workers applying for jobless benefits fell less than expected for the week ended Oct. 20. Unemployment claims declined 8,000 to 331,000, while economists were calling for a much larger drop of 17,000.
Said Raha, "The economy remains fragile, and the risk of a recession in the next 12 months is still elevated at 40%."
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Flamel Technologies S.A. (FLML), up 28% to $12.03 on news of a positive drug trial.
• Mercury Computer Systems Inc. (MRCY), up 24% to $13.49 on news of a first-quarter profit.
• Abaxis Inc. (CRDC), up 21% to $29.38 on news of an improved second quarter.
Biggest percentage losers:
• Sturm, Ruger & Company Inc. (RGR), down 38% on news of a third-quarter sales decline.
• W.P. Stewart & Co., Ltd. (WPL), down 19%.
• Barrett Business Services Inc. (BBSI), down 18% on news of third-quarter earnings that missed analysts’ projections.
Volume leaders:
• TriQuint Semiconductor Inc. (TQNT) 7,441,900 shares traded on news of higher third-quarter revenue.
• Sturm, Ruger & Company Inc. (RGR) 4,192,200 shares traded on news of a third-quarter sales decline.
• Beazer Homes USA Inc. (BZH) 4,040,300 shares traded.
The day saw 82 small-cap stocks set 52-week lows, while 33 small caps established 52-week highs.
