Russell 2000 enjoying the rally
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are big gainers as investors see signs of a future rate cut. At 1:54 p.m. ET, the small-cap index had added 23.64 points, or 3.18%, to 766.91. The Dow was up 316.54 points, or 2.44%, to 13,274.98.
“Uncertainties about the economic outlook are unusually high right now,” U.S. Federal Reserve vice chairman Donald Kohn told an audience in New York earlier today. “In my view, these uncertainties require flexible and pragmatic policymaking—nimble is the adjective I used a few weeks ago.”
The bulls are on a tear because that remark is being interpreted as a hint that the central bank is considering a cut in its target interest rate when it next meets on Dec. 11.
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% to prevent a sharp economic downturn and ease the credit crunch.
Speaking of the economy, the numbers that came out today were not pretty.
The U.S. Census Bureau reported before the opening that orders for durable goods, which are goods intended to last at least three years, unexpectedly declined 0.4% in October to $214.45 billion.
New orders for non-defense capital goods, an important measure of business spending, also fell.
Business spending is about 20% of U.S. gross domestic product.
More bad economic news came after the opening when the National Association of Realtors reported a 1.2% drop in U.S. existing home sales.
With the ongoing stagnation in the housing sector, it’s not surprising that a measure of mortgage application volume fell 4.3% for the week ended Nov. 23.
The Mortgage Bankers Association announced before the start of trading that weekly index of mortgage loan application volume fell to 652.5 from 681.7 a week earlier. The four week moving average, considered a more stable measure, is down 1.1%.
Investors are awaiting the release of the Fed’s “beige book” with information about regional economic conditions, scheduled for 2 p.m. ET.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• China Finance Online Co. Ltd. (JRJC), up 23% on news it has completed the acquisition of 85% equity interest of a licensed securities brokerage firm in Hong Kong.
• Security Capital Assurance Ltd. (SCA), up 19%.
• Penwest Pharmaceuticals Co. (PPCO), up 19%.
Biggest percentage losers:
• Acorn International, Inc. (ATV), down 15% on news that third-quarter net income came in below expectations.
• Central Garden & Pet Co. (CENT) down 21% on news of a fiscal fourth-quarter net loss.
• BIDZ.com, Inc. (BIDZ), down 10% even though the CEO has denied a report claiming the company engages in shill bidding and holds excessive inventory.
