Twice is nice for Russell
The Russell 2000 (NYSE: IWM) posted a solid gain despite bad news from the U.S. housing sector, while the Dow slipped. The small-cap index rose more than the other major U.S. indices for the second consecutive day, adding 7.23 points, or 0.88%, to 831.97. The Dow Jones Industrial Average (INDU) lost 40.24 points, or 0.29%, to 14,047.31.
Small caps defied the market today, moving up despite news of a steep drop in pending U.S. home sales in August.
The National Association of Realtors reported today that pending home sales fell 6.5% in August due to the ongoing mortgage problems. Its index of pending home sales dropped to 85.5 from an upwardly revised 91.4 in July. That’s the lowest level since tracking began in August 2001 and 21.5% below the level in August 2006
“Fewer contracts were being written because of mortgage availability issues,” said NAR senior economist Lawrence Yun in a statement. “A separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments.”
News of the housing sector’s latest troubles all but guaranteed that the major U.S. indices would spend the day in negative territory, with the Russell 2000 and Nasdaq the sole exceptions.
Stocks opened the session close to the flat line but quickly tumbled as investors were apparently eager to cash in on Monday’s gains and disregarded news of the latest corporate deal-making.
Toronto-Dominion Bank (NYSE: TD) agreed to buy Commerce Bancorp, Inc. (NYSE: CBH) for $8.5 billion in cash and stock. The deal, which will make TD Bank owner of Cherry Hill, N.J.-based Commerce’s more than 420 branches in eight east coast states, is expected to close in the first half of 2008.
Elsewhere in the financial sector, Citigroup Inc. (NYSE: C) agreed to purchase the remaining 32% stake of Japanese brokerage Nikko Cordial Corp. for $4.6 billion. New York-based Citigroup, the largest U.S. bank by market capitalization, initially bought more than 50% of Nikko in April.
Meanwhile, steelmaker ArcelorMittal (NYSE: MT) announced that it will pay $542 million for the remaining stake in Argentina-based Acindar.
