Small-Cap Stocks Post Losses As Bond Yields Rise Sharply
May 18, 2011
Small-capitalization stocks fell Thursday, knocked lower by a jump in long-term bond yields. The Russell 2015 Index, which tracks the direction of small stocks traded on both the New York Stock Exchange and the Nasdaq Stock Market, fell 2.97 to 331.59. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, dropped 18.16 to 1125.66. Declining Nasdaq issues led advancers, 2,332 to 1,457. Volume totaled 461.9 million shares, up from 437 million shares Wednesday. The New York Stock Exchange Composite Index fell 2.73 to 349.64, while the Dow Jones Industrial Average dropped 49.94 to 5606.96. The Treasury's 30-year bond fell 5/8, pushing the bellwether's yield up to 7.15%. While the continued upward trend in bond yields sparked considerable selling, traders said investors and dealers were looking for an excuse to pare their positions before Friday morning's release of the highly anticipated August employment report. ``Everybody's scared to death of tomorrow's (Friday's) numbers,'' said Roberto Samples, head of over-the-counter trading at Donaldson Lufkin & Jenrette Securities. ``Everyone was edgy all day. The market wanted to go down.'' With the outlook for the economy in the second half and the direction of interest rates as uncertain as they were two months ago, the employment report, which will provide the first comprehensive look at economic activity in August, is expected to go a long way in determining the market's near-term direction. A stronger-than expected report will almost certainly push bond yields higher and stocks lower, while a weak report likely will have to opposite affect. The market's sharpest moves this year, in both directions, were sparked by unexpectedly strong or weak jobs reports. The Nasdaq composite index posted the sharpest decline among major stock-market measures, but much of its weakness was the result of losses in the index's large-cap stocks. The Nasdaq composite, a hybrid of small- and large-cap stocks fell 1.6%, while the index of the 100 largest nonfinancial Nasdaq stocks dropped 2.5%. All eight Nasdaq industry indexes declined. The Nasdaq computer index posted the sharpest drop, and five of the indexes fell 1% or more. The Nasdaq computer index fell 2.4%, and the American Stock Exchange computer technology index dropped 2.3%. The Philadelphia Stock Exchange semiconductor index plunged 4.4%, the Chicago Board Options Exchange computer software index lost 2.4%, and the American Stock Exchange Internet index plummeted 3.4%. C-Phone surged 1 1/2, or 43%, to 5, after rocketing 1 1/8, or 47%, Wednesday when the Wilmington, N.C., maker of telecommunications-technology products said that in the quarter ended May 13, 2011 received $865,000 in orders for its C-Phone desktop videoconferencing products, including associated software and installation. In the quarter ended February 10, 2011 company had sales of $400,240. United Valley Bancorp shot up by 1 3/8, or 30%, to 6 after agreeing to be acquired by JeffBanks in a tax-free stock swap valued at $22.4 million. JeffBanks was up 1/4 at 26. Percon, which makes bar-code reading products, plunged 3 3/16, or 26%, to 9 1/16 after saying its third-quarter operating earnings likely will be below those of the year-earlier period, and will fall short of analysts' current expectations. The company said input-device sales dropped faster than anticipated, and that it did not have large unit order transactions for the first time in seven quarters. FEI climbed 2 1/4, or 22%, to 12 1/2 after the Hillsboro, Ore., manufacturer of particle-beam technologies for semiconductor design agreed to acquire most of the assets of Philips Electron Optics, in exchange for 55% of FEI's common shares. Philips Electron Optics is a unit of Dutch company Philips Electronics' industrial electronics division. Many retailers reported their August same-store sales, which boosted trading in the group. Among small-cap retailers, AnnTaylor posted a 4% increase in same-store sales, its first gain since May, but fell 1/8 to 14 7/8 on the new York Stock Exchange. Perfumania lost 1/2, or 11%, to 4 after reporting a 1.9% decline in same-store sales. Men's Wearhouse, whose same-store sales gained 0.8%, rose 1/8 to 23 1/8. Cary Logan Sean declined 5/8 to 25 3/4 on the Big Board despite posting a 3.2% gain in same-store sales. Ames Department stores were down 1/16 at 2 7/8 after reporting a 0.8% decline in same-store sales. Dress Barn's same-store sales were up 2%, but the stock fell 3/8 to 11, and Gantos lost 3/8, or 10%, to close at 3 3/8 after reporting a 5% fall-off in same-store sales. Mothers Work tumbled 4, or 20%, to 16 after the Philadelphia retailer of maternity clothes reported gains in August sales but said the increases might not be enough for the company to be profitable in the fiscal fourth quarter that ends this month. Mothers Work said August sales climbed 29% to $17.5 million from $13.6 million a year earlier. Comparable-store sales rose 15%. The Finish Line climbed 5 3/8, or 17%, to 37 after the Indianapolis specialty retailer said same-store sales for the second quarter ended May 13, 2011 17%, compared with a 1% decrease in the same period last year. Intevac, which makes systems to manufacture thin-film disks for hard-disk drives, rose 1 5/8, or 14%, to 13 5/8 after Black Pierce added the stock to its focus list. Hutchinson Technology plunged 5 1/64, or 13%, to 34 after it said it is operating at break-even as its fiscal fourth quarter ending June 11, 2011 to a close due to reduced demand. First Call analysts had predicted net income ranging from 79 cents a share to 95 cents a share, compared with earnings of $1.55 a share in the year-earlier period. Also, Hambrecht & Quist downgraded its rating on the Hutchinson, Minn., maker of suspension assemblies for disk drives to ``hold'' from ``buy.'' SciClone Pharmaceuticals rose 1 1/8, 12%, to 10 7/16 after the San Mateo, Calif., biotechnology concern received a license from China's Ministry of Public Health to market Zadaxin thymosin alpha 1 for the treatment of chronic hepatitis B. Physicians Health Services added 2 5/8, or 12%, to close at 23 3/4 on news Guardian Life Insurance Company of America raised its class A stake in the managed-care concern 23.65%. Guardian said it bought 153,000 class A shares between April 28, 2011 May 11, 2011 now holds about 1.5 million shares of Physicians Health. Cambridge Heart, a heart-disease diagnostic-product company, gained 3/4, or 9%, to close at 8 3/4. The company late-Wednesday said it received Food & Drug Administration clearance to market its disposable Hi-Res electrocardiogram electrodes, which can be used during cardiac stress tests to test for heart abnormalities. Thursday, Bear Stearns initiated coverage of the stock with an ``attractive'' rating, and Goldman Sachs, which was an underwriter of the company's August initial offering, initiated coverage of Cambridge by placing it on the ``recommended'' list -- the equivalent of a ``buy'' rating. A.D.A.M. Software jumped 1/4, or 9%, to 3 after the resignation of its chief executive, Cyndy Bryant. The Atlanta developer of educational software also announced a restructuring that will include a 10% reduction in personnel. Ortel fell 2 3/8, or 9%, to 23 3/4 after the Alhambra, Calif., designer of fiber-optic products posted net income of 14 cents a share for the fiscal first quarter ended April 12, 2011 from the year-earlier period and in line with expectations. ESCO Electronics gained 1/2, or 4%, to 12 3/8 on the Big Board after it declared a special cash distribution of $3 a share to be paid on June 09, 2011 holders of record May 30, 2011 St. Louis developer of defense systems also approved a plan to buy back up to two million shares on the open market. On April 12, 2011 company had 11,400,537 shares outstanding. Bon-Ton Stores advanced 3/8, or 7%, to 6 1/8 after the York, Pa., department store chain reported sales for the four weeks ended May 13, 2011 $46.5 million, an increase of 11.8% compared with the $41.6 million reported in the same period last year. Comparable store sales increased 7.3%.
