Russell treads higher despite crude reality
Small caps traded marginally in the green midday, while the other major indices skidded, as oil continued its record-setting skyward hike for the second straight session, stoking inflation concerns.
At 12:48 p.m. ET, the Russell 2000 (NYSE:IWM) edged up 5.1, or 0.69%, to 740.74, while the Dow slumped 39.73, or 0.31%, to 12,788.95.
Crude oil bolted north of $132 a barrel this morning, setting another record after the Energy Department reported a surprising decline in crude inventories last week after reporting gains in inventories for the preceding four straight weeks. After jumping as high as $132.08 a barrel, a barrel of crude retreated slightly to $131.75 midday.
While crude gained, the dollar sold off against the euro and the yen and gold gained $7.80 to $928 per troy ounce.
Midday, oil prices and inflation concerns are the major drivers behind the market; however sentiment and the market’s direction could change when the Federal Reserve releases its FOMC minutes at 2:00 p.m. ET.
In major large-cap headlines, media conglomerate Time Warner Inc. (NYSE:TWX) said this morning that it will separate both structurally and legally from its cable television division Time Warner Cable Inc. Technological juggernaut Hewlett-Packard Co. (NYSE:HPQ) reported after Tuesday’s close that second-quarter earnings increased 16%, noting that growth in the overseas arena offset domestic weakness. However, investors are still pouring over the printer and computer maker’s recent acquisition of Electronic Data Systems Corp. (NYSE:EDS).
In broader industry groups coal, oil and gas and railroads are seeing the most upside today, while airlines, financials and restaurants are under pressure.
Financials tumbled after Moody’s Corp. said this morning that it may have mistakenly given Aaa ratings to debt securities, which declined in value thereafter. Additionally, The Wall Street Journal reported this morning that large investment banks are facing losses from new sources in the second quarter as hedges they used to try and offset the impact of the sub-prime crisis have unraveled.
In small-cap headlines, Samson Oil & Gas Ltd. (AMEX:SSN) rocketed 63% midday after the oil and gas exploration and development company said this morning that it acquired a 100% working interest in a 320-acre half section immediately west of the producing State GC Oil Field operated by Penroc Oil Company. Fieldpoint Petroleum Corp. (AMEX:FPP) and Mexco Energy Corp. (AMEX:MXC) are also seeing major upside midday as the oil and gas sector reigns.
Willow Financial Bancorp (Nasdaq:WFBC) is up 21% today, on news that the firm will merge with Harleysville National Corp. (Nasdaq:HNBC). Palm Harbor Homes (Nasdaq:PHHM) was up about 22%, benefiting from an earnings boost.
On the downside, Guaranty Financial Group Inc. (NYSE:GFG) is off 14% midday after stating this morning that it is extending the record date for offering non-transferable stock purchase rights. Shares of Virtusa Corp. (Nasdaq:VRTU) are getting trounced after the global information technology services company reported fiscal fourth-quarter earnings after Tuesday’s close that fell short of the consensus view on Wall Street. The firm also issued fiscal 2009 first-quarter revenue guidance and full year 2009 revenues and earnings below the Street.
