Small caps climb on economic data, crude pullback
Small-cap stocks pushed higher early Friday, underpinned by positive surprises on economic data this morning, and by a pullback in crude oil prices. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was up 10.16, or 1.45%, at 712.55.
The Michigan sentiment survey extended this morning’s upside data surprise trend, beating the median forecast handily at 61.2 versus the projection of 56.4. Still, the number is low historically. Equities did produce a decent bounce when the sentiment figures came out just before 10:00 a.m. ET.
New home sales also topped the forecast, coming out at a pace of 530,000 annual units, compared with an expectation for 500,000. In addition, the May figure was revised upward, which kept the “feel good” data surprise intact heading into the rest of the trading session.
Ahead of the open, the June durable goods report came in well above expectations, with the headline figure up 0.8%, compared with the forecast for a dip of 0.3%. Although durables was a nice upside surprise for equities, the data is a little dated and durable seldom has a staying influence on stocks.
Crude oil futures pulled back shortly after the stock market open, which provided some mild support to equities. Crude oil dipped back below $124 dollars a barrel, which was down more than $2 from pre-opening levels. Despite the decline in crude prices, the U.S. dollar was still down slightly against the euro until the Michigan figure and new home sales data topped the forecast.
Broad market sectors on the rise this morning included airlines, home furnishings, coal, communications equipment, diversified REITS and housewares. Meanwhile, thrifts and mortgage finance firms were taking a hit. Other sectors on the decline included construction materials, apparel, diverse financial services, investment banks and retail apparel.
Small-caps of note were highlighted by Crocs (Nasdaq:CROX) as the maker of plastic shoes was crushed this morning after the firm lowered its outlook overnight. CROX shares were off 45% shortly after the open. Affymetrix Inc. (Nasdaq:AFFX) tumbled 23% on earnings news. Epicor Software Corp. (Nasdaq:EPIC) was down 15%, also tied to earnings results. On the upside, Saia Inc. (Nasdaq:SAIA) rallied some 20% after solid quarterly results. AngioDynamics (Nasdaq:ANGO) was up 15%, gapping higher after solid earnings news.
The Russell pushed through initial chart resistance at 707.50, which means that the next upside point to watch today is near 715.00. It looks a little out of reach, but the best test is actually up near 726. If the market starts to wobble this afternoon, support is at 701, then down at 697.
