Small caps lose grip
The Russell 2000 (NYSE: IWM) and the other major U.S. indices declined in the final minutes of trading as investors got nervous ahead Thursday’s inflation data. The small-cap index lost 6.72 points, or 0.85%, to 782.43. The Dow Jones Industrial Average (INDU) fell 83.16 points, or 0.62%, to 13,223.93.
On a year-to-date basis, the Russell 2000 has retreated 0.63%, while the Dow has risen 6.01% and the S&P 500 has added 3.81%.
Stocks began the day little changed on news that U.S. retail sales growth slowed to 0.2% in October, following an upwardly revised increase of 0.7% in September. The result was in line with economists’ projections but indicates that consumers have become a little more reluctant to spend money due to declining home values and higher gasoline prices.
Most economists expect that fourth-quarter economic growth will shift into lower gear. Consumption is about 70% of gross domestic product.
News on the inflation front was rosier. The U.S. Labor Department reported that the producer price index added a miniscule 0.1% in October, after a jump of 1.1% in September. The core index, which excludes food and energy, stayed put after rising 0.1% the previous month.
Economists were expecting both measurements to rise 0.2%. Producer prices measure the average changes in prices received by domestic producers for their output.
Small-cap stocks moved up out of the gate but then moderated and generally stayed just below the closing level today, while the Dow was trending higher. But the bulls lost their footing within minutes of the closing, when investors apparently adopted a cautious posture ahead of Thursday’s inflation data.
The Labor Department is expected to report that the consumer price index for October increased 0.3%, the same as in October. A higher-than-expected jump in prices will most likely rule out the U.S. Federal Reserve cutting its target interest rate during the remainder of 2007.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Innodata Isogen Inc. (INOD), up 46% to $5.78 on news it swung to a third-quarter profit.
• Greater Community Bancorp. (GFLS) up 40% to $20.20 on news it will be acquired by Oritani Financial Corp. (ORIT) for $187 million.
• Canadian Solar Inc. (CSIQ), up 29% to $14.53 on news of a higher third-quarter profit.
Biggest percentage losers:
• TravelCenters of America LLC (TA), down 23% to $13.25 on news of an analyst downgrade.
• Basin Water Inc. (BWTR), down 22% to $ 8.01 on news of a third-quarter loss.
• Dayton Superior Corp. (DSUP), down 19% to $5.31 on news that third-quarter earnings missed expectations.
Volume leaders:
• Canadian Solar Inc. (CSIQ) 6,237,900 shares traded on news of a higher third-quarter profit.
• Powerwave Technologies Inc. (PWAV) 3,895,000 shares traded.
• GateHouse Media Inc. (GHS) 2,855,200 shares traded on news of a narrower third-quarter loss.
The day saw 42 small-cap stocks set 52-week lows, while 9 small caps established 52-week highs.
