Stocks slump on Greenspan remarks
A modest rally in U.S. stocks lost steam and went into reverse following comments by Alan Greenspan that China’s stock market might be headed for a contraction. The Russell 2000 lost 3.38 points, or 0.40%, to 836.54. The Dow Jones Industrial Average let go 14.30 points, or 0.11%, to close at 13,525.65.
Shares of Cypress Bioscience, Inc. (Nasdaq: CYPB) led the pack of winners today, surging $7.92, or 94%, to $16.37, on news after Tuesday’s close that the San Diego-based company announced preliminary results from a Phase III trial that showed the drug milnacipran is an effective treatment of fibromyalgia syndrome. Fibromyalgia syndrome is a condition which causes stiffness, severe fatigue and insomnia. Investment bank Jefferies & Co responded by reiterating its “buy” rating and raising the stock’s target price to $30 from $14.
Giga-tronics Inc. (Nasdaq: GIGA) increased its annual net loss, the San Ramon, Calif.-based wireless communications test equipment manufacturer said after Tuesday’s close. Net loss for the fiscal year ended March 31 was $1.87 million, or $0.39 per share, compared with a net loss of $0.96 million, or $0.20 per share, for the same period a year ago. Net sales fell 12% to $18.05 million, from $20.61 million a year earlier. Analyst estimates were not available. Shares dropped $0.23, or 11%, to close at $1.82.
News of record fiscal 2007 financial results boosted shares of Mesa Laboratories, Inc. (Nasdaq: MLAB) $4.18, or 23%, to $22.68. Profit for the fiscal year ended March 31 was $3.96 million, or $1.22 per share, compared with $2.81 million, or $0.92 per share a year earlier, the Lakewood, Colo.-based manufacturer of electronic instruments said before the start of trading. Net sales also came in at a record high of $17.2 million, an increase of 49%, compared with net sales of $11.59 million a year earlier. Analyst estimates were unavailable.
The day began with a small rally sparked by news that the shareholders of aluminum giant Alcan Inc. (NYSE: AL) have recommended that it reject a $27.4 billion takeover bid by New York-based rival Alcoa Inc. (NYSE: AA). The Canadian company is talking with Australian mining company BHP Billiton Ltd. (NYSE: BHP) to help it fight off Alcoa, according to news reports.
Contributing to the bullish mood this morning was Norilsk Nickel’s announcement that it has offered $6.25 billion for LionOre Mining International.
However, U.S. stocks stalled and turned down following comments by former Federal Reserve Chairman Alan Greenspan that China’s stock market could suffer a “significant contraction” because its current boom is unsustainable.
Elsewhere, officials from China and the United States wrap up two days of discussions of economic issues today. According to news reports, China has agreed to reduce barriers to American sales of clean-coal technology but balked at efforts to fully liberalize air travel between the two countries.
