Small caps enjoying a rise
The Russell 2000 (NYSE: IWM) is going strong on positive comments from a Fed official and news that billionaire Warren Buffet can help bond insurers. At 1:10 p.m. ET, the small-cap index had climbed 8.82 points, or 1.26%, to 708.57. The Dow Jones Industrial Average (INDU) had advanced 181.52 points, or 1.48%, to 12,421.53.
Stocks have been in the green out of the gate on news that billionaire investor Warren Buffett has offered to have his company, Berkshire Hathaway, assume responsibility for $800 billion of municipal bonds guaranteed by bond insurers MBIA Inc. (NYSE: MBI), Ambac Financial Group Inc. (NYSE: ABK) and Financial Guaranty Insurance Co.
There have been concerns recently that the three companies could be downgraded due to write-downs from insuring subprime debt.
Investors took the news as bullish even though one of the three bond insurers turned down the offer while the other three have not yet replied. The bond insurers would like relief with their entire portfolio, but Buffet is only offering help for their relatively safe municipal bond holdings.
Also helping the bulls is news that St. Louis Federal Reserve Bank President William Poole made a speech today saying that the U.S. economy will likely avoid recession.
Small-cap stocks are rising, with shares of Diamond Management & Technology Consultants Inc. (Nasdaq: DTPI) shining brightly on news that the Chicago-based firm has commenced a tender offer for up to 5 million common shares.
Also enjoying a bump is Stifel Financial Corp. (Nasdaq: SF), which posted an adjusted fourth-quarter profit of $1.14, beating analysts’ forecasts of $0.83 per share.
But NxStage Medical, Inc. (Nasdaq: NXTM) is hurting after the medical device maker reported a wider-than-expected loss in the fourth quarter despite a doubling in revenue from home dialysis products.
