Stimulus glee offsets retailer woes
Small-cap stocks hovered near steady levels into mid-session trading, up from the morning lows amid optimism over the fiscal stimulus plans that were put into greater detail today by President-elect Obama. The stimulus cheer helped offset gloom over sloppy retail sales from discount giant Wal-Mart, which put an early pall on the morning activity. At 12:23 p.m. ET, the Russell 2000 (NYSE:IWM) was up 0.27, or 0.05% at 497.36, outperforming the Dow and S&P 500.
Wal-Mart’s same-store sales were up in December, but short of expectations, which rekindled worries about consumer spending in the recession. Wal-Mart Stores Inc. (NYSE:WMT) was one of the few bright spots during 2008, but if discounters start to struggle, does that mean rising unemployment is forcing consumers to close their wallets altogether right now?
Speaking of unemployment, today’s weekly claims data served up a bullish surprise for the second consecutive week, with the headline figure coming in at 467,000, some 75,000 below the forecast. However, continuing claims were at 26-year highs, which took some of the bullish edge off the number. The market is still bracing for a potential bearish surprise on Friday morning’s big monthly employment report, especially after a private survey Wednesday came in well above expectations.
Looking at sector activity so far today, gold was the top performer, likely benefiting from safe-haven flows and a soft tone in the U.S. dollar. The gold and silver index was up nearly 4% at midday; small-cap gold stock Aurizon Mines Ltd. (AMEX:AZK) was up 4.2%.
Outside of gold, other areas showing strength included home entertainment software, coal, health care facilities, oil refiners, metal and mining stocks and construction firms. On the downside, hypermarkets and supermarkets were taking a hit (spurred by the WMT news). Also, apparel firms were under stress and automakers took a step back today after seeing solid upside moves earlier this week.
Small-cap apparel firm Jones Apparel Group Inc. (NYSE:JNY) was down 8.5% and Abercrombie & Fitch Co. (NYSE:ANF) was down 9.3%, the latter seeing a sizable 24% slide in December same-store sales.
Other small-caps making a move today include Emergent Group Inc. (AMEX:LZR) as the medical laser and surgical equipment maker jumped 23% to fresh 52-week highs. LZR shares have been soaring in recent days, climbing from $4 dollars in mid-December to $9.50 today. Spectrum Control Inc. (Nasdaq:SPEC) gapped higher and was up 18% on a positive reaction to quarterly results for the electronics manufacturer. On the downside, American Oriental Bioengineering Inc. (NYSE:AOB) tumbled nearly 19%, gapping lower to give back a sizable chunk of the recent rally.
The chart picture today for the Russell is quite tame, with the market on an inside session day with very tight ranges. An afternoon breakdown through 491 would be a troubling development, while a rise back above 504 would be a positive sign. For now, the market is simply tracking sideways within a broad consolidation zone.
