Russell holding up with techs, commodity names
Small-cap stocks remained higher into mid-session activity Wednesday, buoyed by a firm tone in technology and commodity stocks that helped counter continuing softness in the financial arena. At 12:50 p.m. ET, the Russell 2000 (NYSE:IWM) was up 7.97, or 1.13%, at 715.27.
Tech stocks gathered upside momentum following upbeat earnings results from Texas Instruments Inc. (NYSE:TXN), which spilled over in the chip arena, with QUALCOMM Inc. (Nasdaq:QCOM), rising 3.6% today. Also, Research in Motion Ltd. (Nasdaq:RIMM) rallied 4.3% as the maker of the Blackberry announced a new flip phone. In recent days, there have been concerns voiced that customers are less willing to spend for new technology and the latest high-end tech gadgets, so the improved tone today was a welcome relief — especially after Tuesday’s big stock market rout.
Commodity stocks continue to provide bullish momentum for small-caps today, even though crude oil prices reversed course and headed lower, slipping to fresh five-month lows. Even with crude oil back on the retreat, coal, steel, metals, gas utilities and oil exploration shares were among the best performing sectors on the market so far today. Even with commodities reflecting a better tone today, the U.S. dollar remained on a roll, charging to fresh 11-month highs against the euro, rising about 0.6% in the process. The greenback was also up nearly 1% versus the yen, stabilizing after recent declines against that currency.
The big question facing market watchers is whether today’s recovery bounce represents nothing more than a short-covering correction amid oversold conditions in the wake of Tuesday’s massive collapse, or if the market is trying to forge a noteworthy bottom. Volume has been fairly light on today’s upside push, which takes some of the starch out of the bullish interpretation.
The top percentage gainers today were littered with small banks, even though large cap financial stocks were slightly lower. Outside of the financial arena, Adams Golf Inc. (Nasdaq:ADGF) was up about 10% without any apparent fresh news to fuel the move. Cambrex Corp. (NYSE:CBM) was up about 11%, basically reversing losses from Tuesday’s slide. On the downside, Dollar Thrifty Automotive Group Inc. (NYSE:DTG) tumbled 25%, giving back a significant chunk of recent gains in the process.
Looking at the short-term chart for the Russell 2000, the market has been testing the 716.60 zone without much lasting success today. Above that point, resistance comes in at 720.50 and then at 726. If the market starts to unravel this afternoon, then support is at 704, 701 and 694.
