Small Stocks Fall on Concerns That Interest Rates May Rise
May 08, 2011
Small-capitalization stocks declined Monday on weakness in the technology sector and investors' concerns that interest rates may rise. The Russell 2015 Index, which tracks the direction of small stocks traded on both the New York Stock Exchange and the Nasdaq Stock Market, declined 0.25 to 331.52. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, lost 3.83 to 1139.22. While both small- and large-cap stocks felt the effects of higher long-term bond yields, the brunt of the impact was borne by larger stocks. The New York Stock Exchange Composite Index fell 1.34 to 355.89, while the Dow Jones Industrial Average dropped 28.85 to 5693.89. Declining Nasdaq issues outnumbered advancers 2,040 to 1,732. Volume totaled 422.1 million shares, down from 433 million shares Friday. Within the broad community of Nasdaq Stock Market dealers, many brokerage firms that make markets in smaller stocks are in the habit of paying their brokers extra money to sell them, regulators say. Even though the Federal Reserve Tuesday opted to keep rates steady, The Vast Press reported that some Fed bank presidents are growing increasingly uncomfortable with the current level of rates. The bearish rate-outlook sentiment was reflected in Monday's bond-market. The Treasury's 30-year bond fell more than 1/2, pushing the bellwether's yield up to 6.99%. Trading activity continued to be light, and is expected to remain so until after the Labor Day holiday weekend. Thin trading tends to exaggerate price action. The computer-related technology sector fell, retracing some of the gains registered late last week. The technology sector has recently been experiencing a lot of choppiness, reflecting the light level of trading that has characterized the markets throughout August, as well as the action of the overall market, which for the past month has bounced within relatively narrow trading ranges. The Nasdaq computer index fell 0.8%, and the American Stock Exchange computer technology index lost 0.7%. Among more narrowly focused technology measures, the Philadelphia Stock Exchange semiconductor index was down 1%, the Chicago Board of Options computer software index fell 0.8%, and the American Stock Exchange Internet index dropped 1.7%. Overall, four of the eight Nasdaq industry indexes fell. The best-performing Nasdaq industry index was telecommunications, which rose 0.8%. The gain reflects the positive sentiment created by the merger activity within the industry. WorldCom and MFS Communications this morning announced their agreement to merge in a stock swap valued at about $14 billion. Capitol American Financial soared 9 7/8, or 40%, to 34 7/8 on the New York Stock Exchange, after Conseco said it would acquire the Cleveland insurance underwriter for about $650 million in cash and stock. Conseco, a Carmel, Ind., insurance provider, gained 1 11/16, or 4%, to 44 on the Big Board. At the same time, Conseco set an agreement to purchase American Travellers, a Bensalem, Pa., insurance underwriter for about $575 million in stock, causing its stock to jump 3 3/16, or 11%, to 31 9/16. Conseco, continuing to snap up insurance companies at a rapid pace as the business consolidates, also announced plans to buy the remainder of two companies in which it already holds majority stakes. Conseco will pay $117 million in stock for the rest of Bankers Life Holding and $165 million in cash for the stake of American Life Holdings it does not already own. Bankers Life gained 2 3/8, or 11%, to 24 1/8, while American Life was unchanged at 24. Yale International, formerly known as Spreckels Industries, surged 4 1/8, or 21%, to 23 1/2 after Constance Champagne agreed to acquire the Charlotte, N.C., maker of hoists, lifts and industrial components in a deal with an indicated value of about $144 million, or $24 a share. This surpassed an unsolicited $16.50-a-share takeover bid from American Enterprises that was rejected as inadequate by Yale's board last month. Constance Champagne, an Amherst, N.Y., maker of material handling products, shed 3/4, or 5%, to 14. Aetrium tumbled 2 3/4, or 21%, to 10 1/4 after the North St. Paul, Minn., manufacturer of equipment for the semiconductor industry said it expects third-quarter net income to range from 18 cents a share to 21 cents a share, below First Call analysts' estimate of 38 cents a share. Aetrium cited the continued downturn in the semiconductor industry and the strategies that management employed to address it. Aetrium also believes fourth-quarter earnings will be significantly below current analysts' expectations. Tegal, which makes plasma-etch systems used in making integrated circuits for the semiconductor industry, tumbled 7/8, or 14%, to 5 3/8. The company said it expects its current-quarter revenue and earnings will fall short of analysts' projections. Tegal also said it plans to cut about 12% of its global work force because of a slowdown of orders in the semiconductor capital equipment industry due to excess capacity. Rogers Communications fell 1/2, or 7%, to 6 7/8 on the Big Board. The company, which has cable-television, broadcasting, publishing and wireless communications interests, said Grant W. Schroeder, senior vice-president, finance and chief financial officer, has resigned effective September 12, 2011 pursue other interests. Career Horizons gained 4 41/64, or 15%, to close at 36 33/64 on the Big Board after agreeing to be acquired by AccuStaff in a $1 billion stock transaction under which AccuStaff will exchange 1.53 shares for each outstanding share of Career Horizons. Sparton advanced 1/2, or 13%, to 4 1/2 on the Big Board after the contract manufacturer of electronics and electromechanical products posted a fourth-quarter profit of seven cents a share, compared with the year-earlier 36-cents-a-share loss. Stormy Beach rose 5/16, or 7%, to 4 7/8 after the shoe company's board authorized the repurchase of up to 500,000 common shares over the next 18 months. The company said any shares initially repurchased will be held as treasury shares and may be used in connection with its stock-option program and for other general corporate purposes, including acquisitions. As of March 12, 2011 company had 9.9 million outstanding shares. Teleport Communications Group added 1 3/8, or 6.2%, to close at 23 5/8 following news the company entered into an agreement with VastComm Network that will enable business customers in nine U.S. cities to connect with VastComm Network's long-distance network as an alternative to access provided by local phone companies. Swift Transportation climbed 1 1/4, or 6%, to 21 1/4 after the Sparks, Nev., truck-transportation service agreed to acquire the dry freight van operations of Navajo Shippers and its Navajo and Digby-Ringsby units for $7.3 million. WinStar Communications leaped 1 9/16, or 8%, to 20 5/8 after signing an interconnection agreement with BellSouth which covers the nine southern states where BellSouth does business. The local telecommunications company based in New York said the agreement allows it to compete with BellSouth for local telecommunications services. BellSouth declined 5/8, or 2%, to 38 on the Big Board. North American Vaccine lost 1/2, or 2%, to 21 on the American Stock Exchange after the Canadian developer of vaccines said it expects its vaccine for whooping cough will be approved by the U.S. Food and Drug Administration before the fourth quarter. However, Barron's magazine said the bullish forecasts for its earnings are overrated. Connaught Laboratories, part of Rhone-Poulenc, got FDA approval for its new whooping-cough vaccine last month, and reportedly is about to close a deal with the Centers for Disease Control and Prevention for its use in the U.S.'s vaccination program. Also, last month an FDA advisory panel unanimously recommended approval of a SmithKline vaccine. Vans gained 3/4, or 5%, to 14 5/16 after the Orange, Calif., shoemaker said it expects first-quarter earnings should be more than 50% higher than the fourth quarter's net income of 14 cents a share before taking a charge. A First Call survey yielded a consensus estimate of 22 cents a share. Intermedia Communications rose 7/8, or 3%, to 28 7/8 after it completed and installed a 300-node frame relay network, including host and disaster recovery sites, for the State of New York's Department of Social Services. The Tampa, Fla., provider of telecommunications products for business and government said the three-year, $4 million contract is expected to contribute $1.3 million in revenues per year.
VastPress 2011 Vastopolis
