Russell reverses early gains
Small-cap stocks roared out of the gate in morning trading, but a widespread sell-off began around 10 a.m. ET and erased gains. A rallying attempt shortly before noon was met with resistance and small caps have continued to decline in Friday afternoon trading. At 1:34 p.m. ET, the Russell 2000 (NYSE:IWM) slipped 4.01, or 0.55%, at 725.74.
At 10:08 a.m. ET, the small-cap index peaked at 735.78, its highest point since early January. Bullish investors were encouraged by a better-than-expected monthly employment report, which showed a decline of 20,000 payroll jobs in April — much better than the median forecast for a loss of 80,000 jobs. In addition, the headline unemployment figure came in at 5%, which was down from 5.1% last month and well above the number cruncher’s pre-release figure of 5.2%.
Just ahead of the employment release, the Federal Reserve added liquidity into the system, which sparked a brief flurry of conspiracy theorists that perhaps the credit crunch was rearing its head again, or that the employment report would be a bearish surprise. Clearly, the latter wasn’t the case, and it’s most likely that the timing of the move reflected the fact that the European markets were on holiday Thursday, which forced the Fed announcement to today’s session.
In commodities trading, oil futures rose 2.8% to $115.67 a barrel, while gold futures gained $6.3 to $857.2 an ounce. Crude oil prices were pushed higher on news of Turkish attacks on North Iraq and profit taking prior to the weekend.
Among currencies, the U.S. dollar is up slightly to $1.5404 against the euro, versus a Thursday close of $1.5459.
Within the small-cap spectrum, Town Sports International (Nasdaq:CLUB) jumped 27%, gapping higher on solid earnings. ComScore Inc. (Nasdaq:SCOR) rallied 15% after posting record revenue and NetScout Systems Inc. (Nasdaq:NTCT) was up 15%, gapping higher on an earnings-driven boost. On the downside, INVESTools Inc. (Nasdaq:SWIM) tumbled 35%, gapping lower on heavy volume after sloppy earnings and Magma Design Automation (Nasdaq:LAVA) was off 31% after earnings news.
