Will the Dollar Survive the Week
Sequenom, Targa Resources Partners and Canadian Solar lead small-cap volume in pre-market
Also included among the results: Univest Corp of Pennsylvania (Nasdaq:UVSP), JA Solar Holdings Co Ltd. (Nasdaq:JASO), Knot Inc. (Nasdaq:KNOT), Huron Consulting Group Inc. (Nasdaq:HURN), Fuel Systems Solutions Inc. (Nasdaq:FSYS) and Solarfun Power Holdings Co Ltd. (Nasdaq:SOLF).
National Penn Bancshares, Nelnet and Molecular Insight Pharmaceuticals lead small-cap percentage gainers
Also included among the results: ChinaCast Education Corp. (Nasdaq:CAST), Wonder Auto Technology Inc. (Nasdaq:WATG), Fuel Systems Solutions Inc. (Nasdaq:FSYS), Celldex Therapeutics Inc. (Nasdaq:CLDX), Fuqi International Inc. (Nasdaq:FUQI) and Talbots Inc. (Nasdaq:TLB).
Century Aluminum, Energy Conversion Devices and Fuel Systems Solutions lead small-cap volume in pre-market
Also included among the results: Imperial Sugar Co. (Nasdaq:IPSU), Force Protection Inc. (Nasdaq:FRPT), Geron Corp. (Nasdaq:GERN), UAL Corp. (Nasdaq:UAUA), PetMed Express Inc. (Nasdaq:PETS) and Vanda Pharmaceuticals Inc. (Nasdaq:VNDA).
Jobs Report Boosts Small Caps 3% today
Small caps are up nearly 3% this afternoon after the government reported this morning that fewer jobs were lost in April than expected.
At 2:06 pm ET, the Russell 2000 (NYSE:IWM) is up 2.81% at 506.81, while the Dow is up 1.56% and the S&P 500 is up 1.85%.
Employers cut 539,000 jobs last month. That is a big improvement from a revised 699,000 job losses in March and less than the loss of 610,000 jobs analysts had been expecting. Also, the federal government reported that 10 of the 19 largest U.S. banks must raise about $75 billion in new capital, which is less than some had feared.
Small caps on the rise today include MedQuist Inc. (Nasdaq:MEDQ), up 64% after announcing first-quarter 2009 results, and Huntington Bancshares Inc. (Nasdaq:HBAN), 36% higher after completing a $120 million stock issue. Fuel Systems Solutions (Nasdaq:FSYS) is also up 40% today after posting a Q1 net profit, while VNUS Medical Technologies (Nasdaq:VNUS) has popped 35% after news broke that Covidien Ltd. will be acquiring the small cap.
*****The headline reads “Bank Stress Tests Lifts Clouds of Uncertainty.” And bank stocks are rallying. Regional bank Fifth Third Bancorp (Nasdaq:FITB) is up 40% in the early going on the news that it needs to raise $1.1 billion.
In total, the government’s stress tests recommended that banks raise $75 billion to withstand further potential losses. I’m not sure how to reconcile the stress tests results with the IMF report on bank losses that was released in April.
In that report, the IMF said that total losses for banks and financial institutions would hit $4 trillion. The U.S. share of that is $1.6 trillion, of which $510 billion has already been written off. That leaves another $550 billion in write-offs . . .
Geokinetics, Fuel Systems Solutions and VNUS Medical Technologies lead small-cap percentage gainers
Also included among the results: MGIC Investment Corp. (Nasdaq:MTG), LMI Aerospace Inc. (Nasdaq:LMIA), Rosetta Resources Inc. (Nasdaq:ROSE), Graham Corp. (Nasdaq:GHM), Central Pacific Financial Corp. (Nasdaq:CPF) and American Reprographics Co. (Nasdaq:ARP).
GMX Resources, Griffin Land & Nurseries and Schnitzer Steel Industries lead small-cap percentage losers
Also included among the results: Value Line Inc. (Nasdaq:VALU), GMX Resources (Nasdaq:GMXRP), Nash-Finch Co. (Nasdaq:NAFC), AK Steel Holding Corp. (Nasdaq:AKS), Catapult Communications Corp. (Nasdaq:CATT) and Fuel Systems Solutions Inc. (Nasdaq:FSYS).
Palm, Rambus and AeroVironment lead small-cap volume in pre-market
Also included among the results: Eagle Bulk Shipping Inc. (Nasdaq:EGLE), Zions Bancorp (Nasdaq:ZION), Take Two Interactive Software Inc.(Nasdaq:TTWO), DrdGold ADR (Nasdaq:DROOY), Fuel Systems Solutions Inc. (Nasdaq:FSYS) and Apogee Enterprises Inc. (Nasdaq:APOG).
National Western Life Insurance, Santander and Fuel Systems Solutions lead small-cap percentage losers
Also included among the results: LMI Aerospace Inc (Nasdaq:LMIA), Comfort Systems USA, Inc (Nasdaq:FIX), Integral System Inc (Nasdaq:ISYS), Nu Skin Enterprises, Inc (Nasdaq:NUS), Fresh Del Monte Produce Inc (Nasdaq:FDP) and Kenneth Cole Productions Inc (Nasdaq:KCP).
Palm, Centennial Communications and Diodes lead small-cap volume in pre-market
Also included among the results: Osiris Therapeutics Inc. (Nasdaq:OSIR), Fuel Systems Solutions Inc. (Nasdaq:FSYS), Energy Conversion Devices Inc. (Nasdaq:ENER), ACI Worldwide Inc. (Nasdaq:ACIW), Bucyrus International Inc (Nasdaq:BUCY) and Eclipsys Corp. (Nasdaq:ECLP).
Fuel Systems Solutions, Gulf Island Fabrication and Macerich lead small-cap percentage losers
Also included among the results: GMX Resources (Nasdaq:GMXRP), Pinnacle Entertainment Inc. (Nasdaq:PNK), Dynamic Materials Corp (Nasdaq:BOOM), Penn Virginia Corp. (Nasdaq:PVA), SL Green Rlty REIT (Nasdaq:SLG) and Hawk Corp. (Nasdaq:HWK).
Fuel Systems Solutions, ArcSight and Insulet lead small-cap volume in pre-market
Also included among the results: Netlogic Microsystems Inc. (Nasdaq:NETL), InterDigital Inc. (Nasdaq:IDCC), American Public Education Inc. (Nasdaq:APEI), Zions Bancorp (Nasdaq:ZION), Energy Conversion Devices Inc. (Nasdaq:ENER) and Bucyrus International Inc. (Nasdaq:BUCY).
Fuel Systems Solutions, athenahealth and Allos Therapeutics lead small-cap volume in pre-market
Fuel Systems Solutions Inc. (Nasdaq:FSYS), athenahealth Inc. (Nasdaq:ATHN) and Allos Therapeutics Inc. (Nasdaq:ALTH) are among the most actively traded companies in Monday's trading among companies with market capitalizations under $1 billion.
Also included among the results: Rambus Inc. (Nasdaq:RMBS), Elbit Imaging Ltd. (Nasdaq:EMITF), Liberty Media Corp. (Nasdaq:LCAPA), Zoltek Companies Inc. (Nasdaq:ZOLT), Papa Johns International Inc. (Nasdaq:PZZA) and Papa Johns International Inc. (Nasdaq:PZZA).
Russell opens lower; FSYS, AGNC, and FLOW lead gainers
Other Market Watch highlights today included:
•Even though chipmakers were higher in European trading, tech stocks were underperforming both the Dow and small caps.
• Citigroup analysts said that they remain underweight on utilities, autos and real estate investment trusts.
• The greenback remained down against the euro, which could underpin various commodity markets today.
• Copper prices rose 4% in London trading, bolstered by a dip in the U.S. dollar vs. the euro & by news of a jump in China imports during November.
Small Cap Gainers:
• Fuel Systems Solutions up 5.13% in pre-market after analysts initiate coverage on Friday of the small cap with a "buy." See (Nasdaq:FSYS).
• American Capital Agency up 3% in pre-market after declaring a $1.20 Q4 dividend. See (Nasdaq:AGNC).
• Flow International 2% higher today after an analyst last week upgraded the small cap from "buy" to "strong buy," citing new 10Q financial reports. See (Nasdaq:FLOW).
• Rackspace Hosting Inc. opened higher on light volume after taking a big hit Friday. See (NYSE:RAX).
Small Cap Losers:
• Grey Wolf Inc. gapped lower and tumbled 40% to 52-week lows. See (NYSE:GW).
• Brown Shoe Company Inc. fell 10%, giving part of a huge rally from Friday. See (NYSE:BWS).
• Accuray down 7% after swinging to a Q1 loss on Friday. See (Nasdaq:ARAY).
• Ruby Tuesday announces multiple store closures and $70 million anticipated loss in 2009; shares dip 4.4%. See (NYSE:RT).
DryShips, Green Mountain Coffee Roasters and USANA Health Sciences lead small-cap volume in pre-market
Also included among the results: Arthrocare Corp. (Nasdaq:ARTC), Eagle Bulk Shipping Inc. (Nasdaq:EGLE), American Capital Agency Corp. (Nasdaq:AGNC), Fuel Systems Solutions Inc. (Nasdaq:FSYS), Accuray Inc. (Nasdaq:ARAY) and Gencor Industries Inc. (Nasdaq:GENC).
Russell closes in the green; LFG, FSYS and INT lead gainers
The Russell 2000 (NYSE:IWM) pushed higher Friday, shrugging off dreadful data on the nation’s employment picture as investors focused on finding bargains amid oversold conditions. Today’s small-cap gainers are Landamerica Financial (NYSE:LFG), Fuel Systems Solutions (Nasdaq:FSYS) and World Fuel Services (NYSE:INT).
Other Market Watch highlights today included:
• The Russell closed up 2.01% and is now down 34% for the year. Meanwhile, the Dow is off 33% in 2008 and the S&P 500 is down 37%.
• The monthly employment report showed a decline in non-farm payrolls of 240,000, above the original forecast for a loss of 180,000.
• The unemployment rate jumped to a five-year high of 6.5%, which was way above the forecast for a rise to 6.3%.
• The AMEX Pharmaceutical Index rose 4.1%, the tech-laden Nasdaq 100 was up 2.3% and the Energy Select Sector SPDR Fund was up 3.3%.
• Crude oil prices tumbled to a 19-month low ahead of today’s session, but managed a very modest bounce into the weekend.
• Agriculture product companies, aluminum and coal stocks also were solid performers today, while financials lagged the overall move.
• Homebuilders, industrial REITS, wireless telecoms and diversified banks were among the worst performers today.
Small Cap Gainers:
• Landamerica Financial Group Inc. (NYSE:LFG) which jumped 85% on news that the firm would be purchased.
• Fuel Systems Solutions Inc. (Nasdaq:FSYS) rode out the volatile wave in energy markets to a strong third-quarter result and the market embraced their . . .
Decent rise despite jobs gloom
Small-cap stocks pushed higher Friday, shrugging off dreadful data on the nation’s employment picture as investors focused on finding bargains amid oversold conditions and amid hope that the worst of the economic numbers — which are likely still on the horizon — have already been factored into the decline. The Russell 2000 (NYSE:IWM) closed up 9.95, or 2.01% at 505.79 and is now down 34% for the year. Meanwhile, the Dow is off 33% in 2008 and the S&P 500 is down 37%.
Small-cap stocks lagged the advance today versus large caps, which hints that investors might have been shopping for bargains but they weren’t willing to be overly aggressive on the risk side of things. Throughout the slide off the September highs, small caps have consistently lost ground to the Dow, which is consistent with a risk-averse attitude fortified by the collapse. Once the market has convincingly bottomed out for the move, small caps will likely once again take a leadership role in the recovery, but if this week’s economic data is any indicator, that could take some time to play out.
Today’s monthly employment report was expected to be awful, and it delivered the goods. Non-farm payrolls tumbled 240,000 and the previous month’s reports were revised upward significantly, which means even more people lost their jobs late this summer than we expected. Although the payrolls figure was above the pre-release consensus, it was actually lower than some of the “whisper” numbers making the rounds late Thursday, which may have played a role in letting the market shrug off the jobs report as a non-event. Still, the unemployment rate jumped to 6.5%, or the highest level in 14 years, which is a tough statistic to ignore. However, market perceptions also helped fend off that blow as well, as it is well-known that many economists are looking for unemployment to climb into early 2009, . . .
LandAmerica Financial Group, Fuel Systems Solutions and Knot lead small-cap percentage gainers
Also included among the results: Luminex Corp. (Nasdaq:LMNX), Emergent BioSolutions Inc. (Nasdaq:EBS), National CineMedia Inc. (Nasdaq:NCMI), Genoptix Inc. (Nasdaq:GXDX), LeapFrog Enterprises Inc. (Nasdaq:LF) and Artesian Resources Corp. (Nasdaq:ARTNA).
Here are the biggest percentage gainers among small caps:
Small caps brush off bleak jobs on bargain hunting, oversold condition
Small-cap stocks pushed higher on the opening, showing a resilient rise in the face of yet another downbeat economic report. Today’s monthly employment release showed unemployment at 14-year highs, but the market was oversold and a dreary report was already priced into expectations. At 9:57 a.m. ET, the Russell 2000 (NYSE:IWM) was up 2.57, or 0.52%, at 498.41.
The employment report showed a decline on non-farm payrolls of 240,000, which was above the early consensus forecast for a decline of 180,000, but which was in line with some of the “whisper” numbers making the rounds the last couple of days. Just yesterday, researchers at Goldman Sachs raised their forecast to a loss of 300,000, and considering upward revisions to August and September data they basically hit the number.
It was interesting to see the initial response, which was that “yes, the report is awful, but it’s not a surprise.” There is also a mentality that the market was already coming off the worst two-day collapse since 1987, so a fair amount of bad news on the jobs front was already priced into things.
Still, the numbing headline off the jobs report is that unemployment spiked to 6.5%, the highest point since 1994. However, even that scary thought has been priced into the market mentality, as many economists already cautioned that unemployment could reach 8% by next year. In a perverse way, there was some “hope” that this awful jobs report would simply speed up another stimulus program from the government.
President-elect Barack Obama is slated to hold his first post-election news conference later this afternoon after meeting all day in Chicago with a team of economic advisors. Aides to Obama have already said this morning that he will not announce any . . .
DryShips, Canadian Solar and Solarfun Power Holdings lead small-cap volume in pre-market
Also included among the results: Zhongpin Inc. (Nasdaq:HOGS), Fuel Systems Solutions Inc. (Nasdaq:FSYS), TBS International Ltd. (Nasdaq:TBSI), Ezcorp Inc. (Nasdaq:EZPW), True Religion Apparel Inc. (Nasdaq:TRLG) and Clean Energy Fuels Corp. (Nasdaq:CLNE).
Here are the most actively traded companies among small caps:
Fuel Systems Solutions: Tools for a more fuel-efficient future
Shares of the Santa Ana, Calif. small cap closed at $31.89 on Monday, up 123% from the start of the year, reflecting both a growing investor interest in all things green as well as Fuel Systems' proven track record of selling and installing gear that turns traditional internal combustion engines into flexible pieces of equipment that can run on cleaner-burning fuels such as natural gas, propane and biogas.
Fuel Systems' last several quarters have outperformed expectations, most recently in its second quarter, when it reported a 50% spike in revenue over the year-ago quarter, which President Matthew Beale said underscored "the rapidly expanding demand for alternatives to petroleum to fuel vehicles."
Fuel Systems' revenue rose to $98.3 million from $65 million in the three months ended June 30, 2008. Net income rose to $4.6 million from $0.3 million in the same time. Four analysts who track this company project net income will shoot up to $1.45 per share in 2008 and $1.82 per share in 2009 from $0.58 per share last . . .
Small caps soar amid resurgent dollar, rosier inflation picture
Small-cap stocks took flight Friday, soaring amid a huge rally in the U.S. dollar, which helped deflate commodity prices, thereby brightening the inflation picture. The Russell 2000 (NYSE:IWM) jumped 20.89, or 2.93% to 734.30, notching the eighth-largest one-day gain of the year.
The U.S. dollar jumped 318 basis points, or more than 2% against the euro, which lifted the greenback to the highest daily close since late February. With many of the world’s key commodity markets priced in dollar terms, a strengthening buck often pulls down physical markets because they become more expensive to purchase. A great case in point is the crude oil market, which collapsed 4% Friday, slipping to $115.20 dollars a barrel. Crude oil prices are now down 21% from the record highs set in July – and remember, a 20% decline off the highs is recognized as entering bear market territory. After consumers had to fork out more than $4 dollars a gallon for gasoline at times this summer, a bear market in energy would be a welcome relief to pocketbooks. That relief extends to the grocery store as well, where soaring commodity prices were also biting into consumer spending capabilities. Corn prices hit a 5-month low today, and the Commodity Research Bureau Index, which tracks 19 commodities markets, tumbled to 4-month lows.
The dramatic move in the dollar and in crude oil prices helped ease investor worries about the credit crisis moving back to the fore. Financial stocks were hammered during Thursday’s stock market decline, but fought back today, with the Financial Select SPDR rising 3.4% and the PHLX Banking Index rising 3.4% as well. Clearly, retailers smiled at the thought of a consumer who wasn’t in a dour mood from a trip to the gas station, as the S&P Retail Index jumped 6.2%. The story surrounding a reversal in commodities isn’t just one for the consumer, either; the downtrodden airline business embraced the slide in jet fuel costs with a hearty 8.3% surge on Friday. In fact, about the only equity sectors that weren’t in the plus column revolved around the commodities theme, with coal, gold, oil exploration, oil drillers and gas utilities all in the red...
Fuel Systems Solutions soars 18% on analyst upgrade
In today’s trading, shares of Fuel Systems Solutions are at $32.88, up $5.04 from Tuesday’s close. Trading volume is below average, at about half amount of usual shares.
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:
Aladdin Knowledge Systems, Avis Budget Group and MarineMax lead small-cap percentage losers
Also included among the results: Fuel Systems Solutions Inc (Nasdaq:FSYS), Pyramid Oil Co (Nasdaq:PDO), Royale Energy Inc (Nasdaq:ROYL), Temecula Valley Bancorp Inc (Nasdaq:TMCV), Thomas Weisel Partners Group Inc (Nasdaq:TWPG) and Horsehead Holding Corp (Nasdaq:ZINC).
Here are the biggest percentage losers among small caps:
Fuel Systems Solutions slumps after analyst downgrade
China Sky One Medical, Quest Resource and Fuel Systems Solutions among 52-week highs
Also included among the results: Multi-Fineline Electronix Inc (Nasdaq:MFLX), Met-Pro Corp (Nasdaq:MPR), Hanger Orthopedic Group Inc (Nasdaq:HGR), Pioneer Southwest Energy Partners LP (Nasdaq:PSE), Atlas Acquisition Holdings Corp (Nasdaq:AXG) and HireRight Inc (Nasdaq:HIRE).
Here are the new 52-week highs among small caps:
FieldPoint Petroleum, Pyramid Oil and Credo Petroleum among 52-week highs
Here are Wednesday’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $50 million and $750 million:
Biggest percentage gainers:
• Samson Oil & Gas Ltd. (AMEX:SSN), up 68.7% to $6.51 after the Australian oil and gas producer signed an agreement to give Samson a 100% working interest and 75% revenue interest in a 320-acre area close to an oil producing field. Samson paid $300 per acre and is required to drill an initial well within a year or risk forfeiting the lease for the acreage.
• CREDO Petroleum Corp. (Nasdaq:CRED), up 32.1% to $16.46 despite no significant announcements.
• The Walking Company Holdings, Inc. (Nasdaq:WALK), up 26.3% to $6.00 despite no reports from the company.
Biggest percentage losers:
• US Airways Group, Inc. (NYSE:LCC), down 22.1% to $5.35 after the Tempe, Ariz.-based airline operator said Wednesday afternoon that it had no plans to charge passengers for the first checked bag. American Airlines (NYSE:AMR) said Wednesday that it will start charging passengers $15 for the first checked bag. Also sending the stock lower, US Airways posted a 2.5% increase in the number of full-time employees in March, according to the U.S. Department of Transportation.
• ShengdaTech, Inc. (Nasdaq:SDTH), down 13.6% to $8.42 despite no announcements from the company.
• Guaranty Financial Group Inc. (NYSE:GFG), down 13.4% to $5.17 after the Austin, Texas-based regional bank announced a stock offering of up to $350 million.
FieldPoint Petroleum, Pyramid Oil and Credo Petroleum among 52-week highs
Mexco Energy Corp (Nasdaq:MXC), ATA Inc (Nasdaq:ATAI) and Fuel Systems Solutions Inc (Nasdaq:FSYS) are also among the new 52-week highs.
Here are the new 52-week highs among small caps:
Houston American Energy, Digital Ally and Fuel Systems Solutions among 52-week highs
Northwest Pipe Co (Nasdaq:NWPX), VanceInfo Technologies Inc (Nasdaq:VIT) and NCI Inc (Nasdaq:NCIT) are also among the new 52-week highs.
Here are the new 52-week highs among small caps:
Crystal River Capital, Western Refining and Corus Bankshares among 52-week lows
US Shipping Partners LP (Nasdaq:USS), LCA Vision Inc (Nasdaq:LCAV) and Adams Golf Inc (Nasdaq:ADGF) are also among the new 52-week lows.
Here are the new 52-week lows among small caps:
Iomai, Brigham Exploration and Fuel Systems Solutions among 52-week highs
Maine & Maritimes Corp (Nasdaq:MAM), VAALCO Energy Inc (Nasdaq:EGY) and VanceInfo Technologies Inc (Nasdaq:VIT) are also among the new 52-week highs.
Here are the new 52-week highs among small caps:
Mild gains for Russell
Small-cap shares edged higher Tuesday, carefully sidestepping yet another record high in crude oil prices, analyst downgrades on brokerages and nagging concerns about pinched consumer pocketbooks. Instead, the focus was on investment money flow out of other products into stocks, yet another “better-than-advertised” key economic report on retail sales and ideas that a bevy of Federal Reserve speakers were tilted toward inflation risk versus sluggish growth worry. For the day, the Russell 2000 (NYSE:IWM) gained 3.62, or 0.49%, to 736.85. After notching the highest daily close since Jan. 3 on Monday, today small caps managed to accumulate the loftiest intraday reading since Jan. 4.
Investors were able to set aside overnight losses tied to the aforementioned analyst downgrades of brokerage firms and jitters over losses in European shares when the monthly retail sales report came out above expectations. Although the headline figure came out near the forecast at 0.2%, the ex-autos component was at 0.5%, which was well above the median projection of 0.2%. In essence, it allowed the market a little breathing room early on as traders then sorted through various Federal Reserve speakers, earnings news, crude oil gyrations and merger/acquisition news.
It was another day in which small caps outperformed large-cap index products, which is a positive signal for bulls, who might be wondering whether or not equities can extend the rally off the March lows. However, despite the small-cap edge on large caps of late, it should also be noted that volume has been anemic. Instead of the old adage “sell in May and go away,” perhaps investors just went away and didn’t bother with the selling part.
Stock market investors had to navigate through some uncertain water today, as a dizzying array of Federal Reserve speakers were out providing their perspective on monetary policy moves and the state of the economy. It’s never easy to fully decipher Federal Reserve Chairman Ben Bernanke’s state of mind, much less . . .
Iomai, Fuel Systems Solutions and USANA Health Sciences lead small-cap percentage gainers
Avant Immunotherapeutics Inc (Nasdaq:AVAN), LaserCard Corp (Nasdaq:LCRD) and North American Palladium Ltd (Nasdaq:PAL) are also among the biggest percentage gainers.
Here are the biggest percentage gainers among small caps:
Small caps in the red
Small-cap stocks are treading shallowly in the red midday, while the other major indices remain deeper in the red after Fed Chairman Bernanke said that markets are “far from normal,” oil prices hit record levels, major brokerage houses on the Street were downgraded and housing prices saw the steepest decline in 26 years.
At 1:19 p.m. ET, the Russell 2000 (NYSE:IWM) edged down 1.45, or 0.2%, at 731.78, while the Dow had skidded 84.27, 0.65%, at 12,792.04.
Federal Reserve Chairman Ben Bernanke spoke earlier this morning about liquidity issues in the financial markets. He said that the liquidity measures taken by the Fed to ease the credit crisis have helped, but that the markets are still “far from normal.” Also slated to speak this afternoon on the state of the economy are Federal Reserve San Francisco President Janet Yellen, Kansas City Fed President Thomas Hoenig and Dallas Fed President Richard Fisher.
“I believe that the current credit problems will take some time to resolve. Therefore, monetary policy will remain loose for much longer than many are anticipating,” said Doug Roberts, chief investment strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices. “You still have negative interest rates. Eventually as fear abates and as oil prices stabilize, small caps are going to start to rally because of the liquidity infused into the system. You’re even starting to see small caps at least in parity with large caps this year.”
Today’s pullback comes on the heels of Monday’s robust 1% advance. Oil reversed course nearing $127 a barrel intra-session on concerns that Iran may cut crude oil production. Gold slumped $16.60 per ounce to $868, as the greenback gained ground against the euro and the yen.
In other bleak economic news, the National Association of Realtors reported this morning that single-family home prices declined 7.7% in the first quarter, . . .
Mild dip as retail sales, M&A take edge off profit-taking
Small-cap stocks edged slightly lower, pulled down by profit-taking from traders who caught the rally Monday, by analyst downgrades for several brokerage firms and by ongoing jitters over crimped consumer spending. However, better-than-forecast retail sales data generated some buying interest this morning. At 9:55 a.m. ET, the Russell 2000 (NYSE:IWM) was down 2.01, or 0.27%, at 731.23.
The retail sales report sported a headline figure at minus 0.2%, which was in line with the forecast, but the ex-autos figure was up 0.5%, which was well above the consensus of 0.2%. The surprisingly stout sales figure sparked a reversal in overnight selling in stocks, pushing stock index futures and index basket products into the green ahead of the regular opening.
The market has seen a run of late where economic data surprises on the upside, but many in the economic community remain unconvinced that a recovery in equities or the recent above-forecast data means that the economy is out of the woods. “Equity prices in the United States, Europe, Japan and India show a noticeable recovery from this tumultuous period, while stock prices indexes in China, Brazil and Russia have also posted gains from their recent lows. We remain skeptical because the worst of the weakness in U.S. business activity is not here yet,” Asha Bangalore, economist with Northern Trust, said in an email.
The market could continue to bask in the glow today of the Hewlett-Packard (NYSE:HPQ) purchase of Electronic Data Systems (NYSE:EDS) for $12.6 billion, which will heighten the anticipation of additional merger and acquisition activity. If there is M&A activity in large caps, certainly there are deals to be done for small-cap companies as well.
Coming into today’s session, the market was on the defensive in overnight trading on a dip in European shares following a jump in U.K. inflation data and write-downs from a large French bank. In addition, an Oppenheimer analyst downgraded . . .
Monday’s pre-market gainers and losers
Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $50 million and $750 million:
Biggest percentage gainers:
• Fuel Systems Solutions, Inc. (Nasdaq:FSYS), up 19% after reporting first-quarter results after Monday’s close that beat the street and raised full-year revenue guidance.
• Kenexa (Nasdaq: KNXA), up15% after the global provider of talent acquisition and retention services reported first-quarter earnings after Monday’s close that trumped the consensus on Wall Street, while revenues met. The company also issued full year guidance above analysts’ estimates and second-quarter revenues above the Street.
• Ultrapetrol (Bahamas) Ltd. (Nasdaq:ULTR), up 13% after the industrial transportation company reported first-quarter results Monday evening that beat the consensus on Wall Street. The small cap attributed the robust results to strong demand in all of its main lines of business.
Biggest percentage losers:
• ShopNBC (Nasdaq:VVTV), down 10% after the 24-hour TV shopping network said after Monday’s close that it expects to report a decline in first-quarter revenues below the consensus on Wall Street, as the company grappled with a difficult consumer economy and a slowdown in discretionary spending.
• Hoku Scientific, Inc. (Nasdaq:HOKU), down 7% after reporting fourth-quarter results this morning that fell short of the consensus view on Wall Street.
• Comverge, Inc. (Nasdaq:COMV), down 5% after reporting a first-quarter net loss that was wider than Wall Street expected, but narrower from the year-ago quarter.
Small cap carnage amid soft earnings, soaring crude
The Russell 2000 (NYSE:IWM) took a hit Tuesday, tumbling 14.29, or 1.99%, to 703.71. Through much of the afternoon the index was flirting with losses beyond 2.5%, which has only happened eight times this year. Small caps bore the brunt of investor disdain, dropping more than one percentage point in excess of the Dow or S&P 500.
The sharp decline in small-cap versus large-cap issues was fueled by several factors, including concerns that small-cap banks will struggle even more so than large-cap banks through this credit crunch, as large banks have an easier time raising capital, said Nick Kalivas, vice president of financial research with MF Global, in an email.
In addition, Kalivas said that a weak dollar was positive for large caps over small caps because the larger companies tend to have more exposure to overseas customers, and a weak dollar makes their goods more attractively priced to foreign customers.
Furthermore, Kalivas said that earnings within the small-cap sector suffered relative to large caps. “Big losses were seen in AXE, OMCL and ASTE, which hurt small . . .
Stocks swoon on record oil prices, sinking dollar
Stocks are continuing to crumble midday after crude oil and the greenback hit records. Lackluster outlooks from juggernauts Texas Instruments (NYSE:TXN) and DuPont (NYSE:DD) also weighed down the market.
At 1:28 p.m. ET, the Russell 2000 (NYSE:IWM) toppled 17.6 points, or 2.45%, to 700.04, while the Dow sunk 137.11 points, or 1.07%, to a level of 12,687.91.
Crude oil climbed to an intraday record of $120 a barrel, as the dollar hit a new low against the euro. The greenback climbed to $1.60 per euro for the first time after the European Central Bank signaled it will not slash interest rates due to inflation concerns Oil also spiked on a Nigerian supply disruption.
“Over the last 24 hours, four ECB speakers state that they’re concerned about inflation — one going as far as to say that they’re considering raising rates every month going forward,” Andy Busch, BMO Capital Markets global ethics strategist said. “This is part of why the U.S. dollar has come under so much pressure from the euro.”
In economic news, the National Association of Realtors said this morning that existing-home sales slid 2% in the month of March to a seasonally adjusted annual rate of 4.93 million from a level of 5.03 million in February. The sales number was . . .
Transcat, Volterra Semiconductor and Fuel Systems Solutions lead small-cap percentage gainers
Transcat, Inc. (Nasdaq:TRNS), Volterra Semiconductor Corp. (Nasdaq:VLTR) and Fuel Systems Solutions, Inc. (Nasdaq:FSYS) are among the biggest percentage gainers in Tuesday's trading among companies with market capitalizations under $750 million.
Zoran Corp. (Nasdaq:ZRAN), Mexco Energy Corp. (AMEX:MXC) and Twin Disc, Inc. (Nasdaq:TWIN) are also among the top small-cap percentage gainers.
Here are Tuesday's biggest percentage gainers among small caps:
Fuel Systems posts Q4 above the Street, says end market remains strong
Alternative fuel components and systems provider, Fuel Systems Solutions, Inc. (Nasdaq:FSYS) this morning reported fourth-quarter results that beat the consensus on Wall Street and noted that the economic, political and environmental solutions provided by increasing uses of gaseous fuels will continue to drive the global market. The Santa Ana, Calif. –based company also said it will focus on commercial high-volume fleet applications for its systems and components going forward.
Shares advanced 15.25%, or $2.14, to $16.17 out of the gate. For detailed price information and recent news stories about Fuel Systems, click FSYS.
Small caps dip
The Russell 2000 (NYSE: IWM) slipped into the red as gains that started off the day on news of possible asset sales by big banks were overshadowed by weak new home sales data. After trading above 782, the small-cap index dropped 1.80 points, or 0.23%, to 771.71. The Dow Jones Industrial Average (INDU) gained 5.69 points, or 0.04%, to 13,365.54.
On a year-to-date basis, the Russell 2000 is off 1.995%, while the Dow is up 7.15% and the S&P 500 has risen 4.37%.
The Commerce Department reported shortly after the start of trading this morning that sales of new U.S. homes plummeted by a more-than-expected 9% to a seasonally adjusted annual rate of 647,000, a 12-year low. Economists were expecting that new home sales would fall to 715,000 from 728,000 in October.
On account of the bleak housing data, treasuries climbed to their highest in two weeks, nearing the best year since 2002. In contrast, the dollar slipped versus the euro for the sixth day, the longest descent since October.
Among the major positive news of the day, Citigroup Inc. (NYSE: C) and HSBC Holdings are among U.S. and European banks that are considering major asset sales, The Wall Street Journal reported this morning. Citigroup could sell an 80%-held student loan, its North American auto-lending unit, its 24% stake in Brazil credit-card operation Redecard and the bank's Japanese consumer finance business. HSBC might liquidate its auto-finance business.
Adding to the sanguine news, the Chicago arm of the National Association of Purchasing Managers reported that business activity in the Chicago area expanded in December, topping expectations.
The index jumped to 56.6, compared with 52.9 in November. Analysts were predicting an index of 52. Readings above 50 signify economic expansion.
Fuel Systems Solutions: Converting engines to clean-burning gas
Coca-Cola turned to California-based IMPCO Technologies, now an operating subsidiary of Fuel Systems Solutions Inc. (Nasdaq: FSYS), for the devices to convert its vehicles’ engines to propane use, saving money by using cheaper propane and contributing to the reduction of pollution in Mexico City.
Fuel Systems Solutions has not been what you could call a model company, but it is orders like these that keep investors interested in the world’s leading supplier of alternative fuel systems for internal combustion engines. Even now, as the company faces delisting for the second time in three years for late reporting of its financials, the stock has been treading water around the $17 level, down from its 52-week high of $25.11 in February, giving it a market cap of about $250 million.
The company has not yet filed financial statements for the fourth quarter and full year 2006 and the first two quarters of 2007 because of a voluntary investigation into its stock option grant practices between 1996 and 2006. After the close of trading on Friday, the company said that preliminary review from this investigation indicates that the company will probably need to restate its results for the years 2001 to 2005 to account for non-cash charges with regard to stock-based compensation.
The company also said Friday that it believes it has fulfilled the requirements set by Nasdaq to submit information by last Thursday (July 26) to keep the exchange from proceeding with delisting for the late filings of financials. Nasdaq also set a deadline of September 6 for Fuel Systems to submit the late filings.
