Russell falls, third record for Dow
The Russell 2000 (NYSE: IWM) fell but the Dow Jones Industrial Average (INDU) closed at a third consecutive record high. The small-cap index dropped 7.30 points, or 0.85%, to 848.47. The Dow gained 43.73 points, or 0.31%, to a record close of 13,950.98.
The day began with news that Glendale, Calif.-based pancake restaurant operator IHOP Corp. (NYSE: IHP) will buy casual diner Applebee’s International, Inc. (Nasdaq: APPB) for about $2.1 billion in cash, including the assumption of debt. The acquisition is expected to close in the fourth quarter.
Stocks got a small boost later in the morning following news that manufacturing conditions in New York State improved in July.
The new orders index grew for the fourth consecutive month to its highest reading in more than a year, according to a monthly survey by the Manhattan-based Federal Reserve Bank of New York. The poll also showed that 40% of manufacturers have plans to increase production in the second half of 2007, while 26% are planning a reduction.
That’s good news for the economy, as renewed strength in manufacturing could offset the slump in the housing sector.
However, small-cap stocks never gained any upward momentum and moved down, while the price of oil cleared $74 a barrel on news that China’s oil and has producer PetroChina Co. Ltd. is falling short of its stated goal of lifting annual oil and gas output 5.3% in 2007.
Among specific small-cap companies:
Shares of Merix Corp. (Nasdaq: MERX) ended the day in negative territory on news of a fourth quarter loss. The net loss for the period ended May 26 was $80.6 million, or $3.89 per share, compared with a net income of $3.8 million, or $0.19 per share, a year earlier, the Beaverton, Ore.-based maker of printed circuit boards reported before the market open. Analyst estimates were not available. The stock fell $0.09, or 1%, to end at $8.20.
Specialty retailer Restoration Hardware, Inc. (Nasdaq: RSTO) received an analyst upgrade. Investment bank Caris & Co. upgraded the Corte Madera, Calif.-based company to “buy” from “average”, citing an expectation of improved margins in the second half of 2007, according to news reports after the start of trading. The target price has been set at $6.50. Restoration Hardware sells hardware, bathware, furniture, and lighting. Shares added $0.28, or 6%, to close at $5.17.
Shares of Acacia Research Corp. (Nasdaq: ACTG) slipped $0.06, or 0.38%, to $15.74, despite news the patent acquiring and enforcing group entered into an agreement retail giant Lowe’s Companies Inc. (NYSE: LOW) for credit card fraud protection technology. The agreement was inked by the Newport Beach, Calif.-based company’s subsidiary Financial Systems Innovation LLC. The patented technology protects retailers and consumers by providing a unique transaction number to identify each transaction, thus not putting sensitive information on the customer’s receipt. The financials details of the deal were not disclosed.
