Russell advances as oil retreats
Small cap stocks are treading higher at mid-session, as crude oil futures pulled back and new home sales figures edged higher, stealing the limelight from a ghastly consumer confidence number.
At 12:46 p.m. ET. the Russell 2000 (NYSE:IWM) had gained 4.25, or 0.59%, to 728.35, while the Dow edged up 6.52, or 0.05%, to 12486.15.
After breaching a record level of above $135 last week, crude oil prices shed $1.41 to $130.78 a barrel midday, as the oil market focused on a waning economy and weak consumer sentiment figure. The consumer sentiment gauge clocked in at 57.2, below the forecast of 60 and tumbled to a 16-year low.
“The drop in consumer confidence has got people nervous about the levels of the value of crude, specifically gasoline,” said Andy Busch, global foreign exchange strategist for BMO Capital Markets. “[They’re] thinking that these high prices will eventually encourage people to change habits.”
In other economic news, The U.S. Census Bureau and the Department of Housing and Urban Development reported this morning that sales of new one-family homes grew a greater-than-expected 3.3% in April to a seasonally adjusted annual rate of 526,000 from the revised March rate of 509,000, but was 42% below sales in April 2007. Economists were forecasting sales of 520,000. New home sales marked the largest year-over-year decline in 27 years.
Before the new home sales figures came out, the Case-Shiller U.S. home price index reported a sharp decline in first quarter home sale prices, which tumbled 14.1% from the same period last year. The figures were in line with economists’ forecast.
“Lower prices are beginning to attract buyers and this shows up in two places,” said Busch. “First, the decline in existing home sales is almost at a standstill with sales dropping only 1% in April. Next, the National Association of Realtors reported that sales of previously occupied homes in April were up sharply in areas sharply hit by foreclosures: Las Vegas, Sacramento, Fort Myers, and Detroit. We're about at the trough for home sales and the peak for the inventory of unsold homes.”
In broader industry groups, airlines are pushing higher after a large sell off last week, while coal, oil and gas and gold and silver are under pressure.
In small cap headlines, Shares of Lucas Energy, Inc. (AMEX:LEI) are surging 23% mid-session after the U.S. based independent oil and gas company said pre-bell that it expects revenue for total proved reserves to increase 150% to $90.1 million for the fiscal year 2008 from $35.9 million last year. Northern Technologies International Corp. (Amex: NTI) is up 22% midday after the seller of environmentally friendly products said it launched a new business unit focused on biobased and biodegradable plastics intended to replace conventional petroleum-based plastics. Guaranty Financial Group Inc. (NYSE:GFG) is also up midday, rising 15% after the Austin, Tex.-based savings and loan holding company said billionaire investor Robert Rowling’s TRT Financial Holdings LLC will buy $38.4 million of common stock and plans to buy additional shares.
On the downside, shares of Flotek Industries, Inc. (NYSE:FTK) slipped 13% in midday trading after the provider of drilling and production products for the energy and mining industries said this morning that it lowered its earnings guidance for the year.
