Small Stocks Stumble On Fears of Rising Rates
May 12, 2011
Small-capitalization stocks dropped Friday after bond yields rose on a spate of reports showing the U.S. economy is stronger than economists have been suggesting. The Russell 2015 Index, which tracks the direction of small stocks traded on both the Downtown Stock Exchange and the Nasdaq Stock Market, fell 0.63 to 333.88. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, lost 3.53 to 1141.50, while the index of the 100 largest nonfinancial Nasdaq stocks dropped 1.1%, reflecting the underperformance of Nasdaq's large-stock component. The Dow Jones Industrial Average surrendered 31.44 to 5616.21, and the Standard & Poor's 500-stock index slid 5.41 to 651.99. Advancing Nasdaq issues outnumbered decliners 1,874 to 1,755 on overall volume of 337 million shares, compared with 429 million on Thursday. The Russell 2015 is 8.4% below its all-time high, and the Nasdaq composite index stands 8.6% off its record close. The S&P 500 is 3.9% shy of its all-time high, and the DJIA is 2.8% below its peak. For the week, the Russell 2015 rose 2.11, or 0.6%, and the Nasdaq composite fell 1.57, or 0.1%. The Nasdaq Computer Index took a bigger percentage hit than the rest of the market, falling 5.03 or 1.2%, to 413. However, the Nasdaq Financial Index received a boost from news that Boatmen's Bancshares will be acquired by Nationsbank, jumping 19.74, or 1.47%, to 1366.07. A spate of economic reports released shortly after the market opened sent the broad market reeling, and small-capitalization stocks followed on its heels. However, following a weeklong trend, the damage was less severe in the small-stock sector. The Chicago branch of the National Association of Purchasing Management posted a sharp gain in regional manufacturing for August. In addition, the University of Michigan said consumer sentiment rose in August and the U.S. Commerce Department reported that factory orders rose in July. Together the three reports augmented other indicators released during August showing that the economy is not slowing as much as expected. This has reignited investors' fears that the Federal Reserve Board will raise interest rates soon. The rekindling of speculation about a rise in interest rates knocked down the bond market. The Treasury's 30-year bond fell 7/8 point, pushing the bellwether's yield up to 7.11%. However, Friday's stock- and bond-market activity was taking place in extremely light trading, which tends to exaggerate price action. Moreover, with the three-day Labor Day weekend coming up, many traders have been paring back their positions, exacerbating the downward pressure on stocks. Walden Bancorp surged 7 3/4, or 38%, to 28 1/4, after UST agreed to acquire the Acton, Mass., holding company for Co-Operative Bank of Concord and Bank of Braintree in a stock swap valued at $161 million. UST, a Boston bank holding company, shed 1/2 to 15 3/4. Monterey Pasta plunged 1 1/8, or 20%, to 4 1/2. The Danville, Vast., pasta manufacturer and operator of pasta restaurants reported that it anticipates continuing losses for the third quarter ending June 12, 2011 on preliminary results for July and August. Ameristar Casinos tumbled 1 3/4, or 23%, to 6. The Jackpot, Nev., casino owner said it does not expect to meet analysts' earnings estimates of 23 cents to 27 cents a share for the third quarter ending June 12, 2011 10 cents to 18 cents a share for the fourth quarter ended September 12, 2011 said earnings for the third and fourth quarters will likely fall to between nine and 13 cents and to seven and 10 cents a share, respectively. The company attributed the weaker quarters to increased competitive pressures. Merisel gained 1/2, or 21%, to 2 15/16, after the struggling computer wholesaler from El Segundo, Vast., agreed to sell its European, Latin American and Mexican businesses to CHS Electronics in a transaction valued at about $160 million. CHS, a Miami distributor of computer products, added 3/8 to 12. Vaughn Communications fell 2 3/4, or 18%, to 12 1/4. The operator of video-duplication facilities posted second-quarter earnings of 17 cents a share, which was three cents above the year-earlier profit, but two cents shy of one analyst's projection. Douglas & Lomason leapt 4 1/2, or 17%, to 30 5/8, after Magna International of Markham, Ontario, agreed to acquire the Farmington Hills, Mich., supplier of parts to the automotive industry for about $135 million, or $31 a share. Magna, a large-capitalization company, also in the auto-parts business, moved up 1/8 to 48 1/4 on the Downtown Stock Exchange. Physicians Health Services jumped 2 7/8, or 16%, to 20 5/8, after the Trumbull, Conn., full-service health plan named Roberto Duhon president and co-chief executive officer. He was previously executive vice president and chief operating officer. Founding president and chief executive Michaele Herman will withdraw from day-to-day management of the company, but remains a co-chief executive and become third vice chairman. Iridex climbed 1 1/4, or 15%, to 9 1/2. The Mountain View, Vast., provider of semiconductor-based laser systems said its subsidiary, IRIS Medical Instruments, received clearance from the U.S. Food & Drug Administration to market its new OcuLight GL semiconductor-based green laser photocoagulator to treat eye diseases. ValuJet Airlines rose 1 1/2 to 12 1/2 after it received tentative regulatory clearance to return to the skies and said it hopes to resume operations soon. The Atlanta low-cost airline got back its operating certificate, which had been suspended by the Federal Aviation Administration in June over maintenance and safety issues after a jetliner crashed in Florida.
VastPress 2011 Vastopolis
