Small caps rise on housing data
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting solid gains on news of data that point to a stabilization in the U.S. housing market.
At 10:49 a.m. ET, the small-cap index was up 5.28 points, or 0.73%, to 729.23. The Dow Jones Industrial Average (INDU) was up 24.22 points, or 0.19%, to 12,851.71.
Pending U.S. home sales fell a more-than-expected 2.6% in November to a reading of 87.6, the National Association of Realtors reported after the start of trading. The October reading was an upwardly revised 89.9.
However, the numbers are seen as a positive sign for the troubled U.S. housing sector.
The Chicago-based trade group reported that the pending sales activity indicates that existing-home sales will hold steady in the coming months before rising late in the year.
“A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008,” said Lawrence Yun, NAR chief economist, in a statement. “There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase.”
Total new-home sales for 2007 are projected to fall to 773,000, and then decline further to 669,000 in 2008 before rising above 700,000 in 2009.
The stagnation in U.S. housing sector is one of the main factors dragging down domestic economic growth and raising fears of a possible recession.
Shifting gears, the bulls gained strength before the start of trading on news that the CEO of Bear Stearns (NYSE: BSC) is stepping down. The New York-based investment bank took a hard hit in 2007 due to the meltdown in the subprime mortgage sector, which is inextricably tied to the problems in the housing sector.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Pharmasset, Inc. (VRUS), up 34% despite news of an analyst downgrade.
• Golden Cycle Gold Corp. (GCGC), up 17%.
• DivX, Inc. (DIVX), up 13% on news that Sony Corp. (NYSE: SNE) will offer video content on the DivX format.
Biggest percentage losers:
• Measurement Specialties, Inc. (MEAS), down 13% on news it has lowered its guidance for fiscal 2008.
• The Greenbrier Companies, Inc. (GBX) down 13% on news that its fiscal first-quarter results were below analysts’ expectations.
• ArQule Inc. (ARQL), down 10% on news its president and CEO plans to leave the company.
