Small caps riding high
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting strong gains on news the U.S. Federal Reserve will act to boost liquidity.
At 1:12 p.m. ET, the small-cap index had soared 13.00 points, or 2.02%, to 656.97. The Dow Jones Industrial Average (INDU) was up 204.26 points, or 1.74%, to 11,944.41.
Small-cap stocks are rising on news before the start of trading that the U.S. Federal Reserve and four other central banks will make expanded loans of cash and securities to financial institutions in an effort to ease the credit squeeze.
The Fed said it will lend up to $200 billion of Treasury securities to primary dealers for a term of 28 days. The U.S. central bank usually makes such loans overnight.
Shares of catalog and mail-order retailers are currently the top sector performers in today’s rally.
Small-cap direct marketer of brand name and private-label products Systemax Inc. (NYSE: SYX) is seeing its stock jump more than 25% on news after the close on Monday that the Port Washington, N.J.-based company has tripled its fourth-quarter profit.
Shares of PC Mall Inc. (Nasdaq: MALL), which markets computer hardware and software, and Zones Inc. (Nasdaq: ZONS), which resells IT products, are also in the green.
Also posting a modest gain is video-oriented product solutions provider Sigma Designs, Inc. (Nasdaq: SIGM).
“We continue to believe the market is underappreciating [Sigma’s] competitive advantage and the strength of its end markets,” wrote Eric Kainer, an analyst with investment bank ThinkEquity Partners, in a research note today. “However, we cannot guard ourselves against the eternal possibility of an inventory build-up somewhere in the food chain.”
Kainer, who has a “buy” rating on the Milpitas, Calif.-based company’s stock, is reducing his price target to $73 per share from $83 per share.
