Russell 2000 looking strong
The Russell 2000 (NYSE: IWM) is posting strong gains this afternoon. At 2:23 p.m. ET, the small-cap index had climbed 11.00 points, or 1.49%, to 750.06. The Dow Jones Industrial Average (INDU) was up 72.91 points, or 0.55%, to 13,240.11.
Small-cap stocks are comfortably above the flat line despite news of generally unimpressive economic reports.
The International Council of Shopping Centers announced before the start of trading that U.S. retailers saw chain store sales grow 1.4% for the week ending Dec. 15.
“Holiday shopping continues at a moderate pace with some consumers making fewer store visits due to gasoline prices and others just plain procrastinating on completing their shopping lists,” the global trade association said in a statement.
Sales have added 2.1% from the same week in 2006.
A slowdown in consumer spending, which is about 70% of gross domestic product, is one reason why many economists expect that U.S. economic growth will be low in the final quarter of 2007 and into 2008. Pessimists are even forecasting a recession.
The stagnating U.S. housing sector is another factor weighing on the economy.
The U.S. Census Bureau reported before the opening that housing starts in November declined 3.7%, while building permits, a sign of future construction, fell 1.5%.
Privately-owned housing completions in November fell 4.1% to an annual rate of 1,344,000, from a revised October estimate of 1,402,000.
So why are investors bullish?
Probably because Goldman Sachs Group Inc. (NYSE: GS) reported a rise in fourth-quarter profit. The New York-based investment bank, the largest in the world, had a quarterly net income of $3.17 billion, or $7.01 per share, well above analysts’ projected earnings of $6.61 per share.
Unlike many financial institutions, Goldman Sachs has not been seriously affected by the meltdown in the subprime mortgage sector.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Visicu Inc. (EICU), up 32% on news it is being bought by Royal Philips Electronics NV for $430 million.
• Waste Industries USA, Inc. (WWIN), up 20% on news it will be taken private by an investor group for $544 million.
• Prospect Capital Corp. (PSEC), up 20% on news it has declared a second fiscal quarter dividend of $0.395 per share.
Biggest percentage losers:
• BabyUniverse, Inc. (KIDS), down 32% on news of a wider-than-expected third-quarter loss.
• ACI Worldwide Inc. (ACIW), down 12% on news of an analyst reduction in target price.
• ChemGenex Pharmaceuticals Ltd. (CXSP) down 12%.
