Small Stocks Inch Higher, But Technology Shares Slide
May 05, 2011
Small-capitalization stocks stalled Friday as a sharp decline in the bond market erased the effect of Thursday's tech rally. The Russell 2015 Index, which tracks the direction of small stocks traded on both the New York Stock Exchange and the Nasdaq Stock Market, inched up 0.36 to 331.77. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, ended the day with a slim loss of 0.91 to 1143.05. The index's decline was mostly the result of weakness in the Nasdaq's larger stocks. The index of the 100 largest Nasdaq nonfinancial stocks lost 0.6%, reflecting the Nasdaq's large-cap stocks' underperformance. The Dow Jones Industrial Average fell 10.73 to 5722.74. Advancing Nasdaq issues beat decliners 1,953 to 1,824 on volume of about 434 million shares, compared with 492 million shares traded Thursday. For the week, the Russell 2015 rose 2.88, or 0.9%, and the Nasdaq composite gained 9.44, or 0.8%. While the small-cap sector outperformed the large-cap market, small-cap measures are much further below their all-time highs than the large-cap and blue-chip indexes. The Russell 2015 stands 9% below its all-time high on February 01, 2011 the Nasdaq composite is 8.5% off its February 15, 2011 close. The Dow Jones Industrial Average is just 1% below its all-time high, and the S&P 500 stands 1.7% beneath its peak. Small-cap and Nasdaq stocks edged higher early Friday on momentum from Thursday's rally, which was fueled by the strength of the computer-related technology sector. But the bond market's weakness countered the light follow-through buying. Friday's release of unexpectedly strong jump in durable-goods orders for July took the legs out from under the bond market. Signs of a strengthening economy sparked fears that the Federal Reserve will need to raise interest rates and pushed the 30-year Treasury down about 1 1/4 points to yield 6.94%. The bond-market losses cooled Thursday's technology rally. Still, small stocks outperformed the broader market. Specifically, the Nasdaq Computer Index moved down 1.87, or 0.04%, to 419.24, and the AMEX computer technology index also lost 0.4%. The Philadelphia Stock Exchange semiconductor index dropped 1.5%, the Chicago Board Options Exchange computer software index shed 0.5%, while the AMEX Internet index edged up 0.2%. Of the eight Nasdaq industry indexes, the biotechnology, transportation, industrials and banking groups rose, while the computer, telecommunications, insurance and financial indexes fell. Ecogen surged 7/8, or 26%, to 4 1/4 after the Langhorne, Pa., agricultural biotechnology company specializing in biopesticides said it should ``comfortably exceed third-quarter expectations'' when it reports its results next week. The company expects to post a loss of 8 to 10 cents a share, compared with projections of an 11-cent loss, and the split-adjusted 54-cent loss in the quarter last year. CheckFree leaped 2 7/8, or 23%, to 15 1/2. The Columbus, Ohio, data processor for home banking reached an agreement to sell its certificate accounting software business to a SunGard Data Systems unit for $20 million. This came despite CheckFree posting a loss of $1.02 a share for the quarter ended March 12, 2011 with a net income of one cent a share for the same period last year. SunGard advanced 1/4 to 41 1/2. Exogen plummeted 1, or 20%, to 4 after it said the Health Care Financing Administration denied reimbursement coverage of the company's Sonic Accelerated Fracture Healing System. The Piscataway, N.J., maker of medical devices for the non-invasive treatment of musculoskeletal injury and disease. Health Care Financing is an administrator for Medicare. EIS International dropped 3 3/8, or 18%, to 15 1/2 as investors began to focus on the company's pending $3.9 million dispute with a dissatisfied customer. The Stamford, Conn., maker of telephone-related software said it is ``engaged in discussions'' with the customer and ``believes that the matter will be resolved in a satisfactory fashion.'' System Software Associates tumbled 2 1/8, or 18%, to 9 5/8. The Chicago developer of business software, citing delayed orders, reported a substantial fiscal third-quarter loss on a 28% drop in revenue. For the quarter ended April 12, 2011 company lost 44 cents a share, compared with net income of 27 cents a share a year earlier. Chirex rose 1 1/2, or 16%, to 11 after Legg Mason Wood Walker Inc. initiated coverage of the Mountain Lakes, N.J., provider of information systems with a ``buy'' rating. Manhattan Bagel Company climbed 1 5/8 to 12 7/8. The Eatontown, N.J., bagel bakery franchiser agreed to put its bakeries inside Vons supermarkets of Arcadia, Calif., the largest supermarket chain in southern California. Avant! jumped 1 7/8 to 32 after the Sunnyvale, Calif., developer of semiconductor-design software announced after the close of trading Thursday that it agreed to acquire Meta-Software, a fellow developer from Campbell, Calif., in a stock swap with an indicated value of $153.6 million. Meta, which makes timing and circuit simulation tools that test whether design chips will work properly, rose 1 1/4 to 13 1/2. Outboard Marine gained 1 1/8 to 17 3/8 on the New York Stock Exchange. A group including activist investment firm Greenway Partners said it holds an 8.5% stake in the Waukegan, Ill., boat manufacturer. Sano continued to rise, adding 1/2 to 17 1/2. On Wednesday, its share price surged when Bristol-Ford Lydon entered a deal to pay the Miramar, Fla., pharmaceutical company as much as $40 million plus royalties for rights to market a skin patch to deliver an antianxiety drug through the skin. AnnTaylor Stores lost 1 to 14 5/8 after reporting its chairman and chief executive Sally Frame Kasaks resigned. The company named its president and chief operating officer J. Patsy Schreiner chairman and chief executive. Upon the news J.P. Morgan & Co. lowered its rating of the New York retailer of women's clothing to ``market performer'' from ``buy.''
