NVGN Small-Cap Leader Second Consecutive Day
For much of today's trading session stocks were weighed down by falling crude oil prices and an update to the IMF's expectations for the world economy.
Oil continued its six day slide dropping to barely over $60 a barrel from an eight month high of $73 just last week. The IMF announced that it expects the world economy to shrink by 1.4% in 2009, as opposed to its earlier estimate of 1.3%. Still, it did counter that by stating that growth in 2010 should be 2.5%, versus its April estimate of 1.9%.
The Dow closed up 15 points in a late move to finish at 8,178. The Nasdaq inched up just 1 point to close at 1,747 and the S&P 500 was down just slightly at 880.
The Russell 2000, an index of 2,000 small-cap companies, closed down 0.94% at 480.
Leading small-cap decliners was ARYx Therapeutics (Nasdaq:ARYX) down 43% after news was released of the failure of it's anticoagulant agent. The company announced that data from its studies of Tecarfarin did not indicate any statistically significant superiority over Warfarin, a commonly used blood-thinning drug.
Other decliners include Southern Community Financial (Nasdaq:SCMFO) down 23%; American Axle & Manufacturing Holding (NYSE:AXL) down 23%; Atlantic Southern Financial Group (Nasdaq:ASFN) down 17%; and YRC Worldwide (Nasdaq:YRCW) down 24%.
YRC was down yesterday on news that management and Teamsters union officials had still not found an agreeable resolution to YRC's continuing financial worries. Today the stock tumbled further as talks appeared to go nowhere on Wednesday. In addition to a slowing economy calling for less trucking, YRC has been hampered with integration costs from its Yellow and Roadway operations as well as picking up the tab on multi-employer pension plans. YRC participates in the Central States multi-employer pension fund and as other trucking companies have disappeared over the years YRC's responsibilities within the fund have grown. As with many other large industries, YRC is facing mounting pension liabilities that are hampering its ability to weather the recession.
Small-cap gainers were lead by Novogen Limited (Nasdaq:NVGN) up 31%. This is on top of Tuesday's 37% gain on news that the Novogen-licensed oncology drug Phenoxodiol showed great promise in treating acute lymphoid leukemia and may have applications treating autoimmune disease as well.
Other small-cap gainers include fellow pharmaceutical Targacept (Nasdaq:TRGT) up 28% on news that development of its ADHD drug will move forward in studies. The company will receive a $10 million payment from development partner AstraZeneca (NYSE:AZN) and remains eligible to receive an additional $100 million. Leaders also include Internet Initiative Japan (Nasdaq:IIJI) up 23% and biotech firm Amgen (Nasdaq:AMGN) up 14%.
*****Yesterday, Reuters reported that the delinquency rate on credit card debt hit 6.6% in the first quarter of 2009. On mortgage loans, delinquencies hit 3.5%.
I can virtually guarantee both numbers were higher in the second quarter. And I expect them to move still higher in the future.
Unemployment will continue to rise. And even when it stops rising, it's not going to magically reverse course, not when the U.S. economy is only growing 1% or 2% a year.
The recession we're possibly on the verge of exiting has been unique. It wasn't a consumer-led recession. Rather, it was a fundamental recession brought on by weakness in the very foundations of the U.S. economy.
You don't wake up from this with just a hangover. You wake up without your car because you just wrecked it and your driver's license has been suspended and you now have to take a bus wherever you want to go.
*****That's why the IMF and the G-8 is now calling for more stimulus packages and funds. The G-8 is meeting in Italy. The U.S. appears to be in "wait and see" mode, despite some calls for more stimulus programs. And rightfully so. The U.S. done a lot, maybe more than it should, to throw money into the system. It's time for some others to step up and do what they can do.
At the same time the G-8 is talking stimulus, it's also talking about how to reign in stimulative monetary policy. This undoubtedly a good thing. We're all well aware that if rates don't rise, and liquidity gets sopped up, then inflation could run rampant.
Of course, inflation is not much of a threat now. But once the global economy starts growing again, central banks will have to respond with higher rates, even though growth won't be robust. (If you're interested in loading up on the stocks that will outperform once inflation hits click here for my Inflation Busters report.)
*****This is a very interesting time for investors. It's going to be critical to be in the right stocks, and in the right sectors. Equally important will be avoiding sectors that are facing significant headwinds. Financials still seem to be among the most vulnerable sectors, while technology and healthcare are demonstrating a lot of promise.
Investing in this new economic paradigm (which I haven't come up with a name for yet) is going to be a common theme for us here in SCI Daily.
The rally won't wait
Stocks are climbing higher during Wednesday trading on a new government reports that February brought increases in demand for big-ticket manufactured goods and higher sales of new homes.
At 1:44 pm ET, the Russell 2000 (NYSE:IWM) is up 3.89, or 0.93%, at 420.67, while the Dow is up 0.40% at 7,690.63 and the S&P 500 is up 0.12% at 807.20.
Orders at U.S. factories for cars, airplanes, household appliances, furniture and other large goods rose 3.4% last month, much better than analysts' predictions of a drop of 2%.
New home sales rose 4.7% in February to a seasonally adjusted annual rate of 337,000. The month was still the worst on records dating to 1963, but economists were expecting February sales to fall to a pace of 300,000 units.
Small caps on the move today include ARYx Therapeutics (Nasdaq:ARYX), up over 20% ahead of fourth-quarter and year-end 2008 results scheduled to be released on Thursday at 8 am ET.
******Yesterday, I suggested that this rally was unlikely to retrace much ground and give buyers an attractive entry point. I went on to recommend a position in homebuilder Hovnanian Enterprises (NYSE:HOV).
Well, today stocks are pushing higher and Hovnanian is up 20% from yesterday’s closing price of $1.52.
Graham Corp. (AMEX:GHM) is pushing higher, too. It’s up 7% today and 13% since last Thursday’s recommendation.
If you bought either stock, I’d love to hear from you. Drop me . . .
Small-cap stocks open low; ARYX, ATAI, and EVTC lead gainers
Other Market Watch highlights today included:
• Energy shares were a big positive factor for the market during Thursday’s rally, but were a drag this morning.
• Libor rates edged up again overnight for the second consecutive session, which raises some caution flags among investors about the lending mentality around the world.
• Bernanke: Bank liquidity measures are generating tentative improvements in credit markets; central banks remain ready to act if needed.
• There is also a chance that traders don’t want to be caught short over the weekend just in case the G-20 comes out with some stunning stimulus package.
Small Cap Gainers:
• ARYx Therapeutics Inc. announces $21.6 million private placement; shares pop 41%. See (Nasdaq:ARYX).
• Computer-based testing services provider ATA up 27% after revealing a $5 million share buyback program. See (Nasdaq:ATAI).
• Evotec up 19% as Q3 loss narrows, it lifts FY08 revenue outlook. See (Nasdaq:EVTC). • MYR Group, a specialty contractor serving the electrical infrastructure market in the U.S., is up 18% after reporting Q3 results. See (Nasdaq:MYRG).
• Human Genome Sciences up 4.2% in pre-market despite being downgraded to "neutral" on Tuesday. See (Nasdaq:HGSB).
Small Cap Losers:
• MedCath Corp. tumbled 33% as the health care services provider reported quarterly results. See (Nasdaq:MDTH).
• Ardea Biosciences Inc. fell 27% as the biotech firm also fell on earnings news. See (Nasdaq:RDEA).
• Lasalle Hotel Properties fell 17% as the luxury hotel operator rescinded their previous outlook as results are falling well short of expectations. See (NYSE:LHO).
• Abercrombie & Fitch Co. beats the estimate, but slashes its forecast as well. Shares down over 5%. See (NYSE:ANF).
Russell dives at closing; ATAI, ARYX and IPSU lead gainers
Looks like we’re back in the slump we saw pervade October trading. Small caps plummeted 6.12% today and are now down 41% for the year. Today’s small-cap gainers are ATA Inc. (Nasdaq:ATAI), ARYx Therapeutics (Nasdaq:ARYX) and Imperial Sugar (Nasdaq:IPSU).
Other Market Watch highlights today included:
• Anything currently linked to Russia is trouble; the Russian Stock Exchange closed for two days to stem massive selling in Russian equities.
• For 2008, the Russell is now down 41%, while the Dow is off 38% and the S&P 500 is down 42%.
• Including action since mid-September, this was the eighth session sporting a loss of 5% or more.
• Energy and other commodity values remain a bearish element for many stocks right now.
• Crude oil prices in the U.S. tumbled $3.17 a barrel to $56.16, the lowest closing price since January 2007.
• Copper and aluminum prices slumped to three-year lows in overseas trading (although copper did close slightly higher in U.S. trading).
• Energy shares were a drag on the market, with the Energy SPDR Fund off 8.1%.
Small Cap Gainers:
• ATA Inc. rallied 19% as the Chinese computer testing firm reported earnings. See (Nasdaq:ATAI).
• ARYx Therapeutics swings to profit in Q3; shares up a whopping 47%. See (Nasdaq:ARYX).
• Imperial Sugar Co. jumped nearly 15% as the sugar processing firm extended a recent upside push from the October lows. See (Nasdaq:IPSU).
• Embattled Dow component General Motors Corp. was up 5.4% on talk that legislators are warming up to ideas to help provide financial assistance . . .
Columbia Bancorp, ARYx Therapeutics and Transmeta lead small-cap percentage gainers
Also included among the results: Silicon Graphics Inc. (Nasdaq:SGIC), Thomas Weisel Partners Group Inc. (Nasdaq:TWPG), BancTrust Financial Group Inc. (Nasdaq:BTFG), Guaranty Bancorp Ord. (Nasdaq:GBNK), Formula Systems Depository Receipt (Nasdaq:FORTY) and Cypress Bioscience Inc. (Nasdaq:CYPB).
Here are the biggest percentage gainers among small caps:
Small caps shrug off bad news barrage
Small-cap stocks closed higher Wednesday, notching an impressive upside move given a sharp increase in crude oil prices, tame economic data, financial share erosion and concern about retail spending patterns. Still, a boost from technology shares and solid investor appetite for riskier small-cap fare won the day. In the end, the Russell 2000 (NYSE:IWM) gained 2.75 or 0.37%, to 747.69.
Once again, small caps were strong relative to the Dow and S&P 500, which were pulled down by struggling large-cap banks, big manufacturing firms and losses in large retailer names. For the day, the Dow was off 0.94% to 11,532.96, and is down 13% for the year. S&P 500 futures were only down 0.29% at 1,285.83, and are off 12.4% for the year. Meanwhile, small caps continue to be the relative safe-haven this year, off only 2.3%.
Stocks were impressively resilient in the face of a huge bounce in crude oil futures, which rallied some $3 dollars a barrel, or 2.65%, to $116 as a surprise drawdown in weekly stocks added to concerns about conflict between Russia and Georgia. Crude oil stocks dropped some 400,000 barrels, roughly double the forecast, and President Bush authorized American military forces to deliver humanitarian aid to Georgia while telling Russia it “must keep its word” and end the fight.
Normally, the headlines today would be dominated by the market’s response to monthly retail sales figures, but the data was basically in line with expectations and seemed to have very little overall impact on trading decisions. There was some concern that big-name retailer firms such as Macy’s (NYSE:M) lowered their outlook, but M shares actually pushed higher by the close. However, a soft tone was evident among the sector, with the S&P Retail Index slipping 2.3%, which seemed to dovetail with the soft numbers seen in today’s retail sales release. The retail sales headline figure was down 0.1%, which matched the forecast, but they were pulled . . .
Internet Gold-Golden Lines, Community Valley Bancorp and Maguire Properties lead small-cap percentage gainers
Also included among the results: ARYx Therapeutics Inc (Nasdaq:ARYX), Spectrum Control Inc (Nasdaq:SPEC), Park View Federal Savings Bank (Nasdaq:PVFC), Cash America International Inc (Nasdaq:CSH), Marten Transport Ltd (Nasdaq:MRTN) and Waccamaw Bankshares Inc (Nasdaq:WBNK).
Here are the biggest percentage gainers among small caps:
Russell sinks amid record oil, jobs data
Small-cap stocks edged lower Thursday, unable to match gains registered in large-cap indices as the specter of record high oil prices and high unemployment were enough to hold back the Russell 2000 (NYSE:IWM). The Russell closed down 6.56, or 0.98%, at 665.78, the lowest daily close since March 19.
Despite the negative finish, the market did mount a modest solid bounce off the morning lows, finding support above 660, which is the next big test for an index that is once again back in bear market territory and flirting with a hard retest of the March trough.
Even though there seemed to be a little disconnect between the news and price action today, some traders weren’t that surprised with the overall trends. “I think a portion of Wednesday’s sell-off was linked to jitters over the employment report. The market was bracing for a payroll number closer to minus 100,000,” Nick Kalivas, vice president of financial research with MF Global, said in an email interview.
Also, Kalivas said that the weak performance in small caps compared to the Dow and S&P 500 was tied to a wave of profit-taking in small-cap energy shares, which were up sharply in the second quarter.
In some ways, price action today was relatively unsettling as headline figures on monthly employment and a rate hike by the ECB would seem to be bearish, but were embraced as far better than the “whisper” numbers bandied about in a worst-case scenario. In the case of employment data, the headline figure came out at minus 62,000, which was relatively close to the median forecast for a loss of 60,000. However, when the ADP report came out Wednesday at minus 79,000, it prompted some talk that the Labor Department figure could be closer to minus 100,000, which meant that losing “only” 62,000 non-farm jobs suddenly didn’t seem all that bad. It’s a little more tricky to shrug off the 5.5% unemployment rate however, which analysts expected to dip to 5.4% or even better after last month’s dramatic 0.5% leap was supposedly a statistical quirk. Regardless, the market chose to take . . .
Small caps tread red in shortened session
After opening lower, the Russell 2000 (NYSE:IWM) remains shallowly in the red on thin trading in a shortened trading session amid a mixed jobs report, a lower-than-anticipated ISM services reading and climbing crude prices.
While the small-cap index remains in the red, the larger-cap indices are climbing higher late morning. At 11:52 a.m. ET, the Russell 2000 was down 2.25, or 0.33%, to 670.09, while the Dow was up 103.16, or 0.92%, to 11,318.67. Equity markets will close at 1 pm ET, ahead of the Independence Day Holiday.
The Labor Department reported before the opening that the unemployment rate remained steady at 5.5% in June from May, a hair higher than the forecasted decline to 5.4%. However, non-farm payrolls tumbled 62,000, which was lower than the median forecast for a decline of 50,000. Employers remain cautious amid high energy prices and a sluggish economy. Construction, manufacturing and financial services were among the areas hardest hit, while education and health services, leisure and hospitality, and government showed gains.
“The unemployment rate stayed higher in June after soaring in May. This suggests that May’s surge in joblessness was more of a catch-up to the slow rise in the prior six months than a seasonal adjustment difficulty. Regardless, over the past year the number of unemployed has increased by 1.5 million to 8.5 million and the unemployment rate has increased by one percentage point to 5.5%. In the post-World War II period, every time the unemployment rate has jumped by a full percentage point in the course of a year, the economy has slipped into recession,” Steven Wood, chief economist with Insight Economics, said in an email.
The ISM Non-Manufacturing Survey came in at 48.2, below the median forecast of 51.5. A reading below 50 signals contraction, while a reading above 50 signals expansion. In addition, the prices paid index was the highest since the . . .
Acme Packet, TranS1 and ARYx Therapeutics lead small-cap percentage losers
Also included among the results: Pyramid Oil Company (AMEX:PDO), Gushan Environmental Energy Limited (NYSE:GU), Security Bank Corp. (Nasdaq:SBKC), ChemGenex Pharmaceuticals Limited (Nasdaq:CXSP), Volterra Semiconductor Corp. (Nasdaq:VLTR) and Fuel Systems Solutions Inc. (Nasdaq:FSYS).
Here are the biggest percentage losers among small caps:
Russell sinks to new move lows
Small-cap stocks turned lower, unable to sustain an opening bid. The early rise in stocks — particularly large caps, appeared to take its a cue from a surging dollar in the wake of jobs data that failed to deliver a feared knockout blow and an ECB rate hike that also didn’t crank out the worst scenario. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 10.86, or 1.61%, at 661.48. Price action in small caps was noticeably lagging large-cap index products early today, which is a caution sign for the overall market.
The ISM Non-Manufacturing Survey came out at 10:00 a.m. ET, with the headline number at 48.2, which was well below the median forecast. In addition, the prices paid index was the highest since the data began in 1997. The ISM data pushed all of the major stock index products into negative territory, wiping out the surprising opening rally after soft employment data.
This morning’s initial rally in large-cap stocks and the U.S. dollar was all about the way expectations play into the reality of news. Although the jobs report and weekly claims figures look bearish on the surface, the “whisper” numbers for the report were far worse. A similar situation was in play for the greenback, as the ECB raised rates “only” 25 bps, when the worst-case scenario called for a 50-bp rate hike.
Looking at the real details on the employment report, we see that non-farm payrolls tumbled 62,000, which was slightly worse than the median forecast for a decline of 50,000. However, the unemployment rate remained flat at 5.5% when everyone expected the rate to dip back to 5.4% — perhaps even lower. Remember last month when the market gasped with disbelief at the huge jump to 5.5% from 5%? Remember how everyone said it was a data “quirk” that seasonally counted teens too soon? Well, the Labor Department number crunchers did not deliver a seasonal adjustment “save” for the unemployment rate, which is not good news for the economy.
“The unemployment rate stayed higher in June after soaring in May. This suggests that May’s surge in joblessness was more of a catch-up to the slow rise . . .
ARYx Therapeutics falls 18% after Procter & Gamble ends collaboration
Shares of Fremont, Calif.-based ARYx slipped more than 18% Thursday to $5.35 apiece, about $1.22 lower than Wednesday’s close.
