Russell 2000 jumps on earnings
The Russell 2000 (NYSE: IWM) and the other major U.S. indices raced ahead today on news of solid earnings from big players. The small-cap index added 15.28 points, or 1.90%, to 821.39. The Dow Jones Industrial Average (INDU) gained 134.78 points, or 0.99%, to 13,806.70.
On a year-to-date basis, the Russell 2000 has increased 4.31%, while the Dow has added 10.68% and the S&P 500 has gained 8.38%.
Futures were pointing up and trading began in the green following news that Microsoft Corp. (Nasdaq: MSFT) increased its first-quarter net income 23% to $4.29 billion, or $0.45 per share, above the $0.39 per share projected by analysts. The rise was due to a whooping 87% growth in the company’s entertainment and devices segment, primarily due to strong sales of its video game “Halo.”
Adding to the upbeat pre-market sentiment was Countrywide Financial Corp. (NYSE: CFC), the largest mortgage lender in the United States, which said that it will return to profitability in the fourth quarter after losing money in the third quarter due to the meltdown in the subprime mortgage sector.
The bulls took control of trading out of the gate and kept their feet to the pedal throughout the session. With positive earnings news grabbing the headlines, the bears decided to sleep.
But there was some negative news, coming in the form of a larger-than-expected drop in October consumer confidence. The Reuters/University of Michigan final sentiment index fell to a reading of 80.9, the lowest level in more than a year. Economists were expecting to see a decline to a level of 82 from 83.4 in September.
That’s evidence that the stagnation in the U.S. housing sector is sapping Americans’ willingness to spend money, but investors did not appear to be bothered.
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:
• Triad Guaranty Inc. (TGIC), up 41% to $8.53. A company representative could not be reached for comment.
• Graham Corp. (GHM), up 28% to $57.25 on news of a sharp increase in second-quarter profit.
• US BioEnergy Corp. (USBE), up 20% to $7.59. A company representative could not be reached for comment.
Biggest percentage losers:
• Trident Microsystems Inc. (TRID), down 41% to $7.15 on news of an analyst downgrade and a quarterly profit miss.
• Online Resources Corp. (ORCC), down 31% to $8.53 on a weak fourth-quarter outlook and news that third-quarter profit missed expectations.
• Clayton Holdings Inc. (CLAY), down 22% to $5.48 on news of a third-quarter loss.
Volume leaders:
• Trident Microsystems Inc. (TRID) 35,146,000 shares traded on news of an analyst downgrade and a quarterly profit miss.
• Visual Sciences Inc. (VSCN) 9,182,700 shares traded on news it is being purchased by Omniture Inc. (Nasdaq: OMTR) for $394 million.
• Hovnanian Enterprises Inc. (HOV) 5,411,400 shares traded.
The day saw 55 small-cap stocks set 52-week lows, while 43 small caps established 52-week highs.
