Russell near flat as ISM number counters Yahoo! cloud
Small-cap stocks started out the week in the red, but the early dip in equities did not live up to the selling interest suggested by overnight trends and a surprisingly stout ISM Non-Manufacturing Survey sparked a bout of buying that lifted stocks back toward steady levels. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.05, or 0.1%, at 724.69.
The ISM Non-Manufacturing Survey came out at 52%, which was well above the median forecast of 49.5%, and the highest point since December. The reading also snapped three consecutive months of contractions, which is a plus for the economic outlook.
The market had a bit of the merger blues this morning after weekend news that Microsoft (Nasdaq:MSFT) pulled out of negotiations for a takeover bid of internet services company Yahoo! Inc. (Nasdaq:YHOO). Yahoo shares took it in the chin on the news, sinking 18% in early trading Monday. The deal was reportedly close to fruition and the failure to close might take some excitement out of the M&A picture — at least in the short run. That said, wireless phone company Sprint (NYSE:S) was up 7% on news that the firm could be a takeover target.
Marvel Entertainment Inc. (NYSE:MVL) shot up nearly 8% this morning following a blockbuster weekend debut for the movie Ironman, which raked in some $100 million in box office this weekend.
The dollar/commodities inflation front was a source of concern for equity bulls this morning. Crude oil prices jumped back above $117 dollars a barrel overnight on supply concerns out of Nigeria and hostile activities in Northern Iraq.
In addition, the U.S. dollar was soft overnight against both the euro and the yen, which slows excitement that a move out of commodities and into the dollar was underway. In addition to the crude oil spike overnight, soybean and wheat futures were called higher today, and base metals remain on firm footing.
Small-cap shares of note early this morning include Albany Molecular Research (Nasdaq:AMRI), which was up about 17%, gapping higher on solid earnings and STEC Inc. (Nasdaq:STEC), which was up about 16%, also on an earnings-tied boost. On the downside, MAP Pharmaceuticals (Nasdaq:MAPP) was off about 7% without fresh news and Immersion Corp. (Nasdaq:IMMR) was down 5%, also without obvious breaking news.
Small-cap companies slated to release earnings later this morning include: Drew Industrials (NYSE:DW); Boise Inc. (NYSE:BZ), Buckeye Technologies (NYSE:BKI) and Englobal Corp. (Nasdaq:ENG).
From a charting standpoint, the soft tone in the Russell provides some immediate confirmation of the weak close Friday after the employment report. The market made new highs for the move after the jobs data was released, but closed in the red, which is a topping signal on daily charts. Look for support for the Russell today at 720.50, 715 and 708. If the market can halt the selling push today, then resistance is at 731, 735 and 743.
