Russell rises on positive employment data, easing oil
Small caps are rising in Wednesday’s afternoon trading, after three consecutive losing sessions. Promising economic data assuaged investors’ concerns about the financial sector after Moody’s Investors Service warned that it might lower the credit ratings of bond insurers Ambac Financial Group (NYSE:ABK) and MBIA Inc. (NYSE:MBI). At 2:13 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.37, or 0.86%, at 745.37.
The ADP private employment survey today showed a better-than-expected gain of 40,000 jobs in May. Nonfarm payrolls also jumped 60,000 in May. On Friday, the Labor Department reports its data on U.S. nonfarm payrolls for May.
Lower crude oil prices are easing inflation concerns. In afternoon trading, crude oil is down to $122.66 a barrel. Gold futures are also down in Wednesday afternoon action.
Lehman Bros. (NYSE:LEH) shares are dipping after the Wall Street Journal reported that the brokerage firm might need capital from foreign investors to strengthen its balance sheet. Further concerns about the financial sector were raised when ratings agency Fitch said overnight that a couple of large French banks needed to raise capital.
Moody’s Investors Service said Wednesday afternoon that MBIA Inc. has weak new business prospects and may incur higher losses on guarantees it sold on mortgage-backed securities and collateralized debt obligations. Moody’s put MBIA on review for a possible downgrade.
Broad market sectors under pressure include coal energy, home improvement retailers, oil and gas, metal mining, aerospace and defense companies. On the upside, airline, printing services, plastics and rubber, auto and truck manufacturers, school services and semiconductor companies are attracting buyers.
Small caps on the move this morning included China Natural Resources (Nasdaq:CHNR), which is down about 8% on the release of its 2007 earnings report. On the upside, Zhongpin Inc. (Nasdaq:HOGS) rallied some 9%, gapping higher without any apparent fresh news. Also, Bob Evans Farms Inc. (Nasdaq:BOBE), which is on the high-side of a small-cap designation, jumped nearly 16%, following strong earnings numbers.
