Russell 2000 finally smiles
The Russell 2000 (NYSE: IWM) posted a gain for the first time in 2008 as most of the major U.S. indices ended a turbulent session in positive territory. The small-cap index climbed 2.35 points, or 0.33%, to 723.95. The Dow Jones Industrial Average (INDU) advanced 27.31 points, or 0.21%, to 12,827.49.
On a year-to-date basis, the Russell 2000 has lost 5.49%, while the Dow is down 3.30% and the S&P 500 has retreated 3.55%.
Small-cap stocks went on a rollercoaster ride that ended with a late-session rally that pushed the index into the green. Equities started the day higher, then fell abruptly after about 30 minutes and bounced around for the remainder of trading.
With no major news releases scheduled for today, investors turned their attention to future policy actions aimed at improving the U.S. economy and preventing a recession.
“The housing downturn and credit disruption will weigh on our economy and impose a penalty on our economic growth,” Treasury secretary Henry Paulson said in a speech to the New York Society of Securities Analysts this afternoon. “We will likely have further indications of slower growth in the weeks and months ahead.”
However, Paulson did not mention any new measures the Bush administration is planning to keep the economy moving forward and reiterated his belief that there will be no recession.
“While growth looks to have slowed considerably in the last part of 2007, our economy remains resilient and I expect it to continue to grow,” he said.
Also addressing the economy was President Bush, who called on the U.S. Congress to make some of his income tax cuts permanent and urged the passing of a number of housing-related proposals.
With little new or substantive news to alter the picture, it’s not surprising that small-cap stocks barely responded to the high-level speeches.
Helping the bulls today was limited speculation that the U.S. Federal Reserve will cut interest rates to help the economy when it ends a two-day meeting on Jan. 30. At its previous meeting on Dec. 11, the Fed lowered the federal funds rate to 4.25% from 4.50%.
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:
• Pharmasset Inc. (VRUS), up 45% to $20.24 on news that a study of a drug for Hepatitis C achieved favorable results.
• Emergent BioSolutions Inc. (EBS), up 39% to $6.93 on news that it announced better-than-expected preliminary 2007 results.
• InterMune Inc. (ITMN), up 38% to $18.43 on news that a clinical trial of a drug for Hepatitis C achieved its goal.
Biggest percentage losers:
• ShoreTel Inc. (SHOR), down 54% to $6.02 on news it lowered its fiscal second-quarter revenue guidance.
• Avocent Corp. (AVCT), down 22% to $15.71 on news it expects its fourth-quarter revenue to decline.
• hhgregg, Inc. (HGG), down 18% to $10.34 on news same-store sales growth in the third quarter was below that during the same period a year earlier.
Volume leaders:
• Akeena Solar, Inc. (AKNS) 13,953,600 shares traded.
• Origin Agritech Ltd. (SEED) 10,862,500 shares traded.
• OmniVision Technologies, Inc. (OVTI) 6,434,100 shares traded on news of an analyst downgrade.
The day saw 120 small-cap stocks set 52-week lows, while six caps established 52-week highs.
