Russell 2000 heading higher
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are posting solid gains despite news of worse-than-expected declines in consumer confidence and home prices. At 2:27 p.m. ET, the small-cap index was up 5.84 points, or 0.79%, to 740.91. The Dow had added 184.12 points, or 1.44%, to 12,927.56.
Stocks are bullish this afternoon as investors react to news after Monday’s close that Citigroup Inc. (NYSE: C) has sold 4.9% of itself to the Abu Dhabi Investment Authority for $7.5 billion. That’s the investment arm of the emirate of Abu Dhabi, one of the seven emirates in the United Arab Emirates.
News that the largest U.S. bank appears to be returning to solid ground after posting a loss in the third quarter unleashed the bulls. The cash infusion will help the bank get a better handle on billions of dollars on losses from subprime mortgages, which resulted in the recent departure of the CEO.
The bulls briefly slowed down and the Russell 2000 dipped into negative territory after 10 a.m. ET, when the Conference Board announced that its index of consumer confidence for November fell to a two-year low of 87.3 from a downwardly revised level of 95.2 in October. That’s the fourth consecutive drop and a sign that Americans are less willing to spend money.
That’s a problem for the economy because consumption comprises about 70% of gross domestic product. Most economists expect a slowdown in growth in the fourth quarter of 2007 and the first half of 2008, with some even forecasting a recession.
Investors looked saddened for a moment, but the mood didn’t last. The bears also failed to gain traction following a report that U.S. home prices fell 4.5% in the third quarter from a year earlier. That’s the steepest decline since the Standard & Poor’s Case-Shiller housing index was introduced in 1987.
“Most of the metro areas continue to show declining or decelerating returns on both an annual and monthly basis,” said Robert J. Shiller, chief economist at MacroMarkets LLC, in a statement.
The housing slump began in the second half of 2006 and has since resulted in mortgage delinquencies, foreclosures, lender bankruptcies, and financial and stock market turmoil. The debacle is largely to blame for the predicted slowdown in U.S. economic growth.
Elsewhere, the price of oil has fallen $3.30 to $94.40 on speculation that the Organization of the Petroleum Exporting Countries will decide to raise production when it next meets on Dec. 5.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• AspenBio Pharma, Inc. (APPY), up 21% on news that it expects to complete the U.S. Food and Drug Administration’s requirements to receive regulatory clearance for a new medical device.
• WCA Waste Corp. (WCAA), up 19%.
• Security Capital Assurance Ltd. (SCA), up 16% following news after the close on Monday that a member of the board left.
Biggest percentage losers:
• BIDZ.com, Inc. (BIDZ), down 25% on news it reaffirmed its previous guidance for fiscal 2007 and fiscal 2008.
• Genesco Inc. (GCO), down 14% on news it has received a subpoena from a U.S. Attorney for documents related to its pending acquisition by The Finish Line Inc. (FINL).
• China Finance Online Co. Ltd. (JRJC), down 13%. The company could not be reached for comment.
