Russell mounts modest bounce, eyes now on AIG overnight
Small-cap shares had an uneventful session Thursday, hovering near steady levels much of the day while posting one of the quietest daily ranges seen this year. In the end, the Russell 2000 (NYSE:IWM) gained 3.33, or 0.47%, to 719.55. Earnings results from American International Group (NYSE:AIG) came out about 15 minutes after the close, and how AIG fares overnight could play a key role in the opening mood for Friday for financial shares and the market in general.
Early on today the market found support by short-covering from quick turn traders who caught the slide yesterday. In addition, weekly chain store sales and the morning economic data were supportive, which brought some bids into play.
The chain store report reflected decent sales for Wal-Mart (NYSE:WMT) and Costco (Nasdaq:COST), and was expected to play a supportive role for retailers overall. However, the tone was mixed to soft much of the day for retailer shares, and in fact department stores, home improvement retail and general merchandise stores were all lower within the S&P sector groups.
As for the economic data, weekly claims were below forecast and the wholesale inventory data was also above the median projection. While weekly claims caught some attention as bullish news, the market was little changed in the immediate aftermath of both reports. In general, recent economic data out of the United States has tended to surprise on the upside, but with prices pulling back off three-month highs, perhaps traders will need to see more dramatic surprises to spark a new wave of buying.
From the bullish side of things, all you needed to think was commodities: in broad market sectors, aluminum, steel, coal, metals, fertilizer, gold and oil shares were among the best-performing areas. After hogging headlines Wednesday by soaring to record highs, crude oil went for an encore Thursday, shaking off a quiet morning pullback to climb to yet another new peak at $124.57 dollars a barrel, lifted by spillover strength from heating oil futures.
The dollar came into the U.S. trading session on a roll, climbing to the highest point since mid-March versus the euro, but was unable to sustain the run and finished off relatively flat against the euro and lower versus the yen.
As for individual small-cap issues, Gibraltar Steel Corp. (Nasdaq:ROCK) gapped higher, gaining some 28% from an earnings boost. EnerNOC Inc. (Nasdaq:ENOC) jumped 15% after solid quarterly results. On the downside, Akeena Solar Inc. (Nasdaq:AKNS) was off about 19% following soft earnings. MCG Capital Corp. (Nasdaq:MCGC) was down 18% in the aftermath of posting quarterly results.
Tech shares were solid performers Thursday, and bellwether IBM (NYSE:IBM) touched a 52-week high right near the close, which could attract money into the tech arena into the weekend.
Looking at the chart picture, Thursday’s small range, light volume session lacks punch and the immediate structure is dominated by Wednesday’s outside reversal. The Russell 2000 is back on a test of the 20-day moving average, and hasn’t closed below that line since April 22. The market still needs to mount a decisive push through 731, which turned back the tide on the early February recovery and has once again flexed muscles on this move. For Friday’s session, look for resistance at 720.50, 726 and 731, with support down at 713.50, 708 and 700.
