Small caps stay higher
Small-cap stocks remained higher into midday trading, surviving a choppy response to economic data this morning that served up better-than-expected numbers on services sector activity, but slumping factory orders and sinking pending home sales. The market now can calm for a an hour or so, waiting for the FOMC minutes, which will be released at 2:00 p.m. ET. At 12:26 a.m. ET, the Russell 2000 (NYSE:IWM) was up 6.15, or 1.2% at 511.18, outpacing more modest gains in the Dow and S&P 500.
Homebuilder, energy and retailer stocks were solid performers so far today, and surprisingly, airline stocks were doing well despite a rise to five-week highs in crude oil prices. Energy futures did peel back off the morning peak, which may have served up a little relief for companies with large exposure to energy price risk. There was also some thinking that when crude oil seemingly failed above $50 dollars today that was a positive signal that even the geopolitical tension in Israel and the gas dispute in Russia weren’t enough to stoke a major explosion right now.
Looking at sector activity so far today, the best performers were health care facilities, industrial real estate investment trusts, metal and mining stocks, internet retailers, semiconductors, life insurers, coal and automobile manufacturers. Speaking of carmakers, General Motors Corp. (NYSE:GM) was up 4% and Ford Motor Co. (NYSE:F) was up 5.4% as the market anticipates rescue funds will provide a lift for embattled automobile firms in the first quarter.
Mining stocks were underpinned by a sharp advance in the copper market, which jumped 7% today. Copper is considered a key barometer of economic activity, so a rally there would be a good sign for the global economy, but there is some thought that some of the rise in copper is fueled more by New Year’s restructuring of commodity index products. With copper weighting increased for the indices, it can heighten interest in the market from funds who buy broad commodity index structured products.
On the downside of things today, food retailers, brewers, chemical companies, finance firms, biotechs and footwear firms were among the worst performing sectors.
Individual small-caps on the move were highlighted by Indevus Pharmaceuticals Inc. (Nasdaq:IDEV), which gapped higher and soared 69% on unusually brisk volume amid news that the firm would be purchased for $370 million. Macquarie Infrastructure Co. LLC (NYSE:MIC) rallied 36%, as the airport services firm climbed to the highest point since mid-November. Even though retailer stocks were higher overall, small-cap apparel firm Christopher and Banks Corp. (NYSE:CBK) was down 13%, back on a test of the 20-day moving average after seeing sizable recent gains.
Looking at the chart picture, the Russell stalled near our resistance zone at 514.50 and must tackle that point today post-FOMC to suggest a run toward 525 without first seeing a test of support again. If the market starts to wobble after FOMC, then support is at 497.
