Small caps rise for second day
News of strong third-quarter earnings lifted the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) to a second consecutive positive close. The small-cap index added 8.45 points, or 1.04%, to 818.53. The Dow gained 109.26 points, or 0.81%, to 13,676.23.
On a year-to-date basis, the Russell 2000 has increased 3.95%, while the Dow has added 9.63%.
With no major news on the economic front, investors turned to earnings.
The bullish mood was set after the close on Monday when Apple Inc. (Nasdaq: AAPL) reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.
More good news came this morning when New York-based card issuer American Express Co. (NYSE: AXP) announced that third-quarter profit rose 10%, while telecommunications giant AT&T Inc. (NYSE: T) said that its third-quarter net income increased 41% due to its acquisition of BellSouth Corp.
Among small-cap companies, jet engine components maker EDAC Technologies Corp. (Nasdaq: EDAC) posted a 500% rise in third-quarter profit. Similarly, newspaper publishing company Journal Communications, Inc. (NYSE: JRN) also saw its third-quarter net income climb.
The generally upbeat third-quarter numbers suggest that the anticipated U.S. economic slowdown and ongoing slump in the housing sector have not negatively impacted corporate earnings.
But investors’ enthusiasm started to wane around noon after retailer Target Corp. (NYSE: TGT) lowered its same-store sales forecast for October and Wal-Mart Stores Inc. (NYSE: WMT) said that it now plans less capital expenditures in fiscal 2007 compared with a previous forecast made in June.
The Russell 2000 slipped and had no clear direction for about two hours, but assumed an upward trajectory around 2 p.m. ET, for its second gain in as many sessions.
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:
• Waste Industries USA Inc. (WWIN), up 26% to $35.75 on news of a takeover bid.
• Asiainfo Holdings Inc. (ASIA), up 21% to $10.70.
• Cardica Inc. (CRDC), up 20% to $13.44 as investors saw a buying opportunity following a pullback due to a $40 million stock shelf offering on Oct. 15, according to analyst Jose Haresco from Merriman Curhan Ford & Co.
Biggest percentage losers:
• Ambassadors Group Inc. (EPAX), down 44% to $22.22 on news of lower program enrollments.
• PFF Bancorp Inc. (PFB), down 18% to $11.45 on news of a second-quarter loss.
• Vitran Corporation Inc. (VTNC), down 16% to $14.42 on news of a third-quarter profit drop.
Volume leaders:
• PFF Bancorp Inc. (PFB) 5,105,900 shares traded on news of a second-quarter loss.
• Blockbuster Inc. (BBI) 4,371,300 shares traded.
• Superconductor Technologies Inc. (SCON) 3,401,400 shares traded.
