Still lower, digesting jobs data
Small-cap stocks remained lower into mid-session, pressured by worries over the economy following a dour report on the nation’s employment status. Energy shares and homebuilders were taking a hit today, which added to the bearish tilt. Still, the market bounced off the early lows as investors continue to bet that the worst of the recession news is already priced into the market. At 12:26 p.m. ET, the Russell 2000 (NYSE:IWM) was down 11.79, or 2.35% at 490.22.
Today’s monthly employment release from the Labor Department said that the unemployment rate climbed to 7.2%, the highest level since 1993. Although the jobless rate was above expectations, the 524,000 decline in non-farm payrolls met the consensus forecast and was better than the “whisper” numbers floating about ahead of this morning’s report. Treasury markets turned higher after the news, which suggests the economy fears are still very much in play.
Looking at sector activity so far today, technology stocks, energy firms, banking shares and homebuilders were pacing the declines. Retailers were also taking a hit, with apparel and accessory companies down hard again today. Losers were swamping winning themes, although gold and tobacco stocks were in positive territory.
Speaking of homebuilders, small-cap Lennar Corp. (NYSE:LEN) tumbled 20% taking a big hit just a day after climbing to the highest close in three months. Staying on that theme, KB Home (NYSE:KBH) was down 5.4% as the firm reported a bigger-than-expected quarterly loss.
Energy firm BPZ Resources Inc. (AMEX:BPZ) tumbled 14%. Crude oil prices fell about 4% into midday trading, with U.S. Feb crude futures flirting with the $40-dollar level amid concerns about the U.S. economy and plentiful supplies despite recent OPEC production cuts.
On the upside today, Palm Inc. (Nasdaq:PALM) gapped higher and soared 39% on unusually brisk volume as its new touch-screen phone and mobile operating system introduced in Las Vegas at this week’s Consumer Electronics Show won instant favor. Allied Motion Technologies Inc. (Nasdaq:AMOT) also gapped higher, climbing to 52-week highs on a dramatic burst in volume. AMOT typically trades about 10,000 shares; volume so far today was over 740,000 shares.
The Russell has been moving back and forth around the key 491 support line so far today; a decisive daily close either above or below that point would serve up some clues about near-term price direction. Below 491, support comes in at 484, then at 473. If the market can stage an afternoon rally, then resistance will be 497, 508 and 514.50.
