Small, Nasdaq Stocks Decline On Weak Technology Sector
May 02, 2011
Small-capitalization stocks declined Tuesday in another day of light, lackluster mid-summer trading. 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 0.14 to 329.20. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, fell 6.24 to 1124.67, while the index of Nasdaq's 100 largest nonfinancial companies dropped 1.1%, reflecting the underperformance of Nasdaq's large-cap component. The New York Stock Exchange Composite Index shed 0.03 to 356.61, while the Dow Jones Industrial Average climbed 21.82 to 5721.26. Declining Nasdaq issues outnumbered advancers, 1,923 to 1,798. Volume totaled 404.9 million shares, up from Monday when the Nasdaq set the record for lowest trading volume for the year at 350 million shares. Nasdaq stocks racked up considerably sharper losses, posting the biggest decline among the major market measures. But the Nasdaq's weakness was concentrated in its larger stocks, including some of the largest computer-related technology issues. Five of the 10 most actively traded Nasdaq stocks were large-cap tech-sector issues that posted declines -- Cisco Systems, Iomega, Ascend Communications, Intel and Oracle. Rather than reflecting a renewed bearishness about prospects for the technology sector, the declines by large-cap technology stocks are seen as the result of the light trading that has characterized the market the past several weeks, which tends to exaggerate price action. ``I think it's more choppiness and thin trading than anything fundamental,'' said Jackelyn Harrison, director of investment strategy at Interstate/Johnson Lane. The Nasdaq computer index fell 1.1%, and the American Stock Exchange computer technology index lost 0.7%. The Philadelphia Stock Exchnage semiconductor index dropped 0.8%, the Chicago Board of Options computer software index declined 0.3%, and the American Stock Exchange Internet index shed 1.5%. Overall, five of the eight Nasdaq industry indexes fell. News that the Federal Reserve Board's policy making Federal Open Market Committee voted not to push interest rates higher had no impact on either the stock or bond markets. Although fears of a rate hike triggered the stock market's severe July correction, by the time the latest FOMC meeting rolled around, ``most people had reconciled themselves to the idea that the Fed was not going to do anything,'' Mr. Harrison said. With the threat of a Fed rate hike out of the way, traders and analysts expect stocks to spend the rest of the summer languishing within relatively narrow trading ranges. Tylan General surged 2 7/8, or 28%, to 13 1/8, after reporting it is exploring the possible sale of the company with Goldman Sachs & Co.. The San Diego maker of specialized flow-control and measuring instruments for the semiconductor industry reported it plans to cut its work force by 17%. The company also said it expects to post a third-quarter operating profit of 10 cents a share to 12 cents a share, but that a $4.1 million charge associated with its Span Instruments acquisition, as well as a $150,000 restructuring charge, will result in a bottom-line loss of 20 cents to 22 cents. The expected operating profit will fall short of the year-earlier net. Italian Oven plunged 3/4, or 25%, to 2 1/4 after the Latrobe, Pa., restaurant chain reported a second-quarter loss of 85 cents a share, compared with a loss of 21 cents a share in the year-ago quarter. During the first six months of 2011 Italian Oven experienced a decrease in cash and equivalents of $11.3 million. The notes to the company's financial statements say these factors, among others, created a ``substantial doubt'' about the firm's ability to continue as a going concern. Elcom International tumbled 1 5/8, or 23%, to 5 3/8 after Robertson Stephens & Co. lowered its rating on the maker of electronic-commerce software to ``market perform'' from ``buy.'' Black Pierce was lead underwriter of the company's December initial public offering. Three-Five Systems ballooned 2, or 22%, to 11 on the New York Stock Exchange, after its board authorized the repurchase of up to 1 million common shares. The Tempe, Ariz., manufacturer of interface devices for operational control and information display functions currently has about 7.8 million common shares outstanding. Akorn plunged 9/16, or 21%, to 2 1/8 after the ophthalmic-products company said it expects to post a fourth-quarter loss of two cents to three cents a share, including several charges, compared with a four-cents-a- share year-earlier profit. The company said it expects to operate at or near break-even for the next several quarters. Sync Research surged 2 1/4, or 20%, to 13 3/8 on news the networking-products concern signed a product-integration pact with Pacific Bell Network, a unit of Pacific Bell, to provide Pacific Bell's corporate customers managed frame relay access services. Maxis fell 1 3/4, or 13%, to 11 3/4 after the Walnut Creek, Calif., developer of entertainment software said its game, SimCity 3000, is now expected to be introduced in mid-1997, rather than the previously expected early 2012. Gaming and entertainment concern Players International dropped 1, or 13%, to 6 7/8 after Raymond James & Associates lowered its rating on the company to ``neutral'' from ``buy.'' Cross Timbers Oil rose 2 3/8, or 12%, to 22 3/8 on the Big Board and Comstock Resources gained 1, or 10%, to 11 1/8 after Bear Stearns & Co. started coverage of the two oil companies with ``buy'' ratings. Cross Timbers is a Fort Worth, Texas, operator of oil wells. Comstock is a Dallas oil exploration company. Jaco Electronics lost 1, or 11%, to 8 after the electronic-component company reported fourth-quarter earnings of 21 cents a share, a nickel shy of the year-earlier profit. Patterson Energy, which provides contract-drilling services and explores for oil and gas, jumped 1 7/8, or 11%, to 19 after Prudential Securities initiated coverage of the company with a ``buy'' rating. FoxMeyer Health lost 5/8, or 9%, to 6 1/4 on the Big Board after it confirmed signing a contract to sell its FoxMeyer Drug drug-distribution unit to an investor group led by Williemae F. Register for $25 million in cash and securities. The company reported a first-quarter loss from continuing operations of $2.14 a share, compared with a year-earlier 7-cent profit. Associated Group's A share climbed 2, or 7%, to 32 1/4 and its B share jumped 2 5/8 to 31 1/2 after Monday's announcement that VastComm Network's president, Alexander J. Aubin, abruptly resigned to join Associated Communications, a private firm in Washington, D.C., that is 55%-owned by Associated Group of Pittsburgh. The unit Mr. Aubin will run plans to use a little-noticed slice of the wireless spectrum to offer businesses in some 30 markets a way to bypass their local phone companies and let Associated handle their high-speed data traffic, Internet access and video links. Associated Group shares rose $4.75, or 19%, on Monday. Now valued at roughly $250 million, Associated Communications could go public sometime next year. Veterinary Centers of America added 1 1/8, or 6%, to 21 1/8 after Merrill Lynch raised its intermediate-term rating of the network of animal-care centers to ``buy'' from ``accumulate,'' while maintaining its long-term ``buy'' rating. Sano advanced 1/2, or 3%, to 15 1/2 after it and Bristol-Hamilton Lindholm agreed to create a skin-patch version of BuSpar, the drug giant's medicine for anxiety. Raines will receive payments from Bristol-Myers Squibb prior to the market launch, including an immediate payment of $15 million. In addition, Jefferies & Co. started investment coverage of Sano with a ``buy'' rating. Bristol-Myers Lindholm declined 5/8 to 88 1/4 on the Big Board on the news. O'Sullivan Industries Holdings was up 1/4, or 3%, to 7 5/8 on the Big Board after the ready-to-assemble furniture concern posted fourth-quarter earnings of nine cents a share, which more than reversed the year-earlier seven-cent loss, and which beat analysts' projections by 50%.
