Russell 2000 ekes out a gain
The Russell 2000 (NYSE: IWM) managed just a modest win today despite a strong start on speculation of an imminent interest rate cut. The small-cap index added 1.71 points, or 0.22%, to 767.77. The Dow Jones Industrial Average (INDU) moved up 59.99 points, or 0.45%, to 13,371.72.
On a year-to-date basis, the Russell 2000 has lost 2.50%, while the Dow has advanced 7.19% and the S&P 500 is up 4.56%.
The day’s economic news was decidedly negative, with reports showing that Americans’ income and consumption growth slowed while spending on construction declined more than expected.
The U.S. Commerce Department reported that consumption increased 0.2% in October, below the projected 0.3%. Consumption increased 0.3% in September. That could be a sign that American consumers have decided to curtail spending due to higher energy prices, tighter credit and the ongoing slump in the housing sector.
October personal income added 0.2%, below economists’ expectations and half the 0.4% rise it booked in September.
The housing sector also contributed bleak news. The U.S. Census Bureau announced that construction spending for October fell a greater-than-expected 0.8%. Predictably, residential construction led the way down, dropping 2% from the level in September and 15.8% from the level a year ago.
On a year-to-date basis, construction spending has amounted to $977 billion, 2.8% below the $1,005.3 billion recorded during the first ten months of 2006.
Nevertheless, stocks opened in positive territory as investors speculated that U.S. Federal Reserve will cut its target interest rate when it meets on Dec. 11.
Fueling the speculation was a speech by Chairman Ben Bernanke after the close on Thursday, during which he told the Charlotte Chamber of Commerce that economic uncertainty has increased due to turbulence in financial markets and the Fed must remain alert.
Many economists have recently come to the conclusion that the U.S. central bank will most likely lower interest rates to prevent a sharp economic slowdown or possibly even a recession.
On Oct. 31, the Fed lowered the federal funds rate, the rate at which commercial banks make overnight loans to each other, to 4.50% from 4.75%.
The bulls were firmly in control of trading until late in the session, when the rally fizzled and stocks moved down. The Russell 2000 and the Dow even briefly dipped below the flat line just after 3 p.m. ET, but then recovered.
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:
• SeaChange International Inc. (SEAC), up 36% to $7.54 on news it swung to a third-quarter profit.
• Clean Diesel Technologies, Inc. (CDTI), up 25% to $23.98.
• China Finance Online Co. (JRJC), up 23% to $23.44. A company representative could not be reached for comment.
Biggest percentage losers:
• Force Protection, Inc. (FRPT) down 28% to $10.81 on news that the U.S. Marine Corps will cut its orders of the company’s bomb-resistant transports.
• Sirtris Pharmaceuticals, Inc. (SIRT) down 20% to $16.09.
• Penford Corp. (PENX), down 14% to 24.20 on news it is selling two million shares of common stock.
Volume leaders:
• Force Protection, Inc. (FRPT) 8,453,100 shares traded.
• Anadigics Inc. (ANAD) 5,471,800 shares traded.
• Anworth Mortgage Asset Corp. (ANH) 3,950,600 shares traded on news the company priced an offering of 9 million shares at $6.70 per share.
The day saw 34 small-cap stocks set 52-week lows, while 17 small caps established 52-week highs.
