Russell opens in the green
Small-cap shares pushed higher after a soft opening, lifted by a firm U.S. dollar and ideas that Wednesday afternoon’s dramatic downturn after the rate cut announcement may have been overdone. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 2.82, or 0.39%, at 719.00.
The ISM Manufacturing Survey — released at 10:00 a.m. ET — came in at 48.6%, which was up just slightly from the forecast at 48.0% . The market was little changed immediately after the report. The Construction Spending report also came out in tandem with ISM, and was down 1.1%, which was below the forecast for a loss of 0.6%.
Weekly Claims data this morning came out before the opening, and showed a jump to 380,000, which was above the forecast. The rise in jobless claims keeps concern about the economy and the employment picture on the front burner ahead of Friday’s big monthly jobs report. Given relatively soft price action since FOMC, investors appear to be in the mood to either book profits on winning longs ahead of that jobs event risk, or else sit on the sidelines and wait for the number before diving back into the fray.
The dollar was on a charge this morning, jumping well over 100 bps, or nearly 0.9%, versus the euro to the highest point since late March. Crude oil was down again in early U.S. trading after tumbling hard yesterday on a jump in inventories.
Investors were still mulling yesterday’s rate cut news and the statement from the Federal Reserve. For the most part, economic research firms have decided that the Fed’s statement means the policy makers are now in a “wait and watch” mode. Although there is some hope that the rate cuts are in the rear view mirror, there are still big hurdles for the U.S. economy to overcome.
Headline stocks of note this morning include Exxon Mobil Corp. (NYSE:XOM), which was down 3% after earnings failed to meet Street expectations. The gambling front was also a sore spot for the market this morning, as Las Vegas Sands (NYSE:LVS) tumbled nearly 10% on the opening after earnings were clipped by investment to fund operations in Macau.
Among individual small-cap shares, Volcom Inc. (Nasdaq:VLCM) gapped higher and was up nearly 27% on an earnings boost. LHC Group (Nasdaq:LHCG) was up about 20%, also benefiting from solid earnings. COMSYS IT Partners (Nasdaq:CITP) jumped about 18% on quarterly results. On the downside, PharmaNet Development (Nasdaq:PDGI) gapped lower, and was down a whopping 30% after sloppy earnings. Shutterfly Inc. (Nasdaq:SFLY) was down 21%, gapping lower after earnings disappointed.
The chart picture for the Russell took a turn for the worse Wednesday as the market forged a bearish outside reversal on daily studies. The index still has not been able to sustain buyer enthusiasm above 724, which marks a big long-term resistance zone on charts. During today’s action, there is initial resistance near 720.50, then at the aforementioned 724. Above that point, the double top from early February at 731 is the next upside point of interest. On the downside, support is pegged today at 713.50, 708 and 701.
