Small caps continue in the green
After declining in morning trading, small-cap stocks began a rally around 10 a.m. ET, surging to more than 729. Better-than-expected earnings from several small-cap companies helped to act as a catalyst for the market rally. At 1:24 p.m. ET, the Russell 2000 (NYSE:IWM) was up 5.60, or 0.77%, at 729.95.
Despite the rally, several bearish indicators gave investors pause early in the session. Federal Reserve Chairman Ben Bernanke said late Monday that increasing home foreclosures might harm the economy. Adding to investors’ concerns was mortgage firm Fannie Mae’s (NYSE:FNM) reported a $2.2 billion loss on credit-associated costs, which enabled the company to post a wider-than-expected quarterly loss of $2.5 billion. Swiss banking giant UBS AG (NYSE:UBS) reported early Tuesday that it will cut 5,500 employees and sell $15 billion in risky debt to BlackRock, Inc. (NYSE:BLK) at 25% off its face value.
Among sectors, the big losers include airlines, water utilities, fabricated plastic and rubber materials producers and personal services firms. On the flip side, companies associated with oil and gas operations, coal, motion picture services, gold and silver were gaining ground.
Some of the firms that have broken out in Tuesday’s trading include China Finance Online Co. (Nasdaq:JRJC), which broke through $23 resistance and is now up about 9% at $23.94. After experiencing a sell-off at $56.75, vacuum and heat transfer equipment maker Graham Corp. (AMEX:GHM) has managed to rise 5.01% to $57.90. Although it’s up 11.85%, oil and gas firm GeoResources, Inc. (Nasdaq:GEOI) has had trouble breaking away from the $17 notch.
Big winners include R.H. Donnelley Corp. (NYSE:RHD), which is up some 28% after the Cary, N.C.-based Yellow Pages publisher’s competitor Idearc posted first-quarter earnings well above Wall Street expectations. R.H. Donnelley releases earnings on May 8. Innophos Holdings, Inc. (Nasdaq:IPHS) is up about 21% after the phosphate producer reported late Monday that it swung to a first-quarter profit. China Technology Development Group Corp. (Nasdaq:CTDC) is jumping more than 14% despite no significant news.
Among losers, Obagi Medical Products, Inc. (Nasdaq:OMPI) is slipping 20% after the Long Beach, Calif.-based skin care products maker missed first-quarter earnings expectations by a solid margin of $0.05. Interline Brands, Inc. (NYSE:IBI) is sliding 15% after the Jacksonville, Fla.-based distributor of maintenance, repair and operations products said it projects second-quarter earnings below Wall Street analysts’ expectations. Atlantic Tele-Network, Inc. (Nasdaq:ATNI) shares are sinking about 15% after the Salem, Mass.-based provider of telecommunications services in the Caribbean and North America reported first-quarter revenue of $45.6 million, which missed analysts’ expectation of $47.1 million.
