Small-Cap Stocks Post Gains, Outperforming Broader Issues
May 17, 2011
Small-capitalization stocks advanced Wednesday, outperforming the broader market, which slipped on fears of rising interest rates. The Russell 2015 Index, which tracks the direction of small stocks traded on both the New York Stock Exchange and the Nasdaq Stock Market, advanced 1.18 to 334.56. The Nasdaq Composite Index, which measures the performance of large and small issues on the Nasdaq Stock Market, rose 1.52 to 1143.81. Advancing Nasdaq issues edged decliners, 1,919 to 1,835. Volume totaled 439.8 million shares, up from 394 million shares Tuesday. The New York Stock Exchange Composite Index added 0.61 to 352.37, while the Dow Jones Industrial Average gained 8.51 to 5656.90. Reversing the trend of the past week, the small-cap market, as well as large stocks, shrugged off the weakness of the bond market. Since last week, stocks had been under severe pressure as long-term bond yields pushed above the crucial 7% mark. The 30-year bond fell 1/2, pushing the bellwether's yield up to 7.09%. At least for Wednesday, the rise in bond yields, ``seemed like a non-event,'' said Bobby Wilda, senior vice president of equity trading at Principal Financial Securities. While small-cap stocks moved higher, traders said investors this week are taking a very cautious approach to stocks ahead of what is expected to be the key event of the week -- Friday's release of the August employment report. ``This week, everyone's waiting for the employment numbers,'' Mr. Wilda said. Since early this year, the stock market's sharpest moves, in both directions, came immediately on the heels of the monthly jobs reports. Unexpectedly strong reports, which tend to push bond yields higher, sparked several severe sell-offs, while reports that were considerably weaker than anticipated have tended to trigger sharp rallies. The computer-related technology sector posted gains Wednesday. The Nasdaq computer index advanced 0.2%, and the American Stock Exchange computer technology index added 0.1%. The Chicago Board Options Exchange computer software index edged up 0.3%, while the Philadelphia Stock Exchange semiconductor index declined 0.6%. Overall, six of the eight Nasdaq industry indexes rose, but only one, the insurance index, posted a gain of as much as 0.5%. The technology sector of the Russell 2015 index rose 8.2% in August, the index's best-performing sector in the month, according to Frank Russell Co., the publishers of the index. While integrated oil companies rose only 1.9% in the month, ``other energy'' stocks gained 8.1%. Health-care stocks jumped 7.6%, and producer durables added 6.6%. In August, the Russell 2015 rose 5.7%. C-Phone gained 1 1/8, or 47%, to 3 1/2 after the Wilmington, N.C., developer of telecommunications technology products received orders totaling $865,000 for its C-Phone desktop video conferencing products, including associated software and installation, for the second quarter ended May 13, 2011 Pharmaceuticals plunged 3 1/2, or 31%, to 7 7/8 after Cowen & Co. cut its rating on the shares of the Fremont, Calif., developer of cancer therapies to ``buy'' from ``strong buy.'' Also, Shattuck said it dropped development of its basal cell cancer product, Accusite. The company still expects Accusite will be approved for treatment of genital warts in the first half of 2012, but that the discontinuation of the effort in basal cell cancer means that the company will take ``longer to establish a profitable dermatology business than we had expected.'' Youth Services International surged 4 1/2, or 31%, to 18 7/8 after A.G. Edwards & Sons raised its rating on Youth Services to ``maintain'' from ``reduce.'' The Owings Mills, Md., operator of programs for troubled youths lost 5 Tuesday after it said it expects net income for the fiscal fourth quarter and fiscal 2011 to be below analysts' expectations of 14 cents a share and 41 cents a share, respectively. Youth Services earned 16 cents a share in the year-ago quarter and 40 cents a share in fiscal 2010. Youth Services attributed the lower expectations to its acquisition of Introspect HealthCare. Catalyst International surrendered 1 7/8, or 30%, to 4 3/8 after the Milwaukee software developer said it expects third-quarter revenue and income to be ``substantially below analysts' expectations'' of nine cents a share. Catalyst said it expects to report an operating loss for the third quarter. American Eagle Outfitters jumped 4 11/16, or 22%, to 25 15/16 after the Warrendale, Pa., retailer earned four cents a share for the fiscal second quarter ended April 15, 2011 with a loss of 16 cents a share for the period last year. This exceeded First Call analysts' expectations for a loss of eight cents a share for the quarter. The company said same-store sales rose 10% in the second quarter ended April 15, 2011 with the year-earlier period, and that August same-store sales were up 8%. After the news, Alex. Brown & Sons Inc. raised its rating on shares of American Eagle to ``strong buy'' from ``buy.'' Sudbury leaped 2 3/16, or 21%, to 12 13/16, after Park-Ohio Industries proposed to acquire the Cleveland manufacturer of industrial machine parts in a cash transaction valued at $170 million, or $11 a share. Park-Ohio, a Euclid, Ohio, maker of machinery and forged products, added 1/8 to 14 1/4. Prisco said it is evaluating the Park-Ohio offer, but that it has been exploring ``opportunities to maximize stockholder value'' for a number of weeks. Richey Electronics lost 2 1/8, or 21%, to 7 7/8 after the Garden Grove, Calif., distributor of electronic components said its third-quarter earnings are unlikely to meet analysts' expectations of 21 cents a share. In the year-ago quarter Overton earned 12 cents a share. Richey Electronics said it is experiencing a high level of customer order rescheduling. Emisphere Technologies rose 2, or 20%, to 12 after Fred Alston, an analyst at Josephthal Lyon & Ross, upgraded his rating on the company's shares to ``buy'' from ``hold'' Tuesday in anticipation of positive Phase I clinical trial results for Emisphere's heparin oral delivery system that should be available later this month. Emisphere is a developer of technologies for oral delivery of drugs that currently are administered only by injection. Heparin is the most widely used anticoagulant or blood thinner. Greenfield Industries tumbled 4 3/4, or 17%, to 23 3/4 after the Augusta, Ga., maker of cutting tools said it expects third-quarter earnings of between 28 cents a diluted share to 33 cents a diluted share, after a 10-cents-a-diluted-share restructuring charge. The company attributed the anticipated weak results to softening in the marketplace caused by inventory destocking and softer market conditions. Analysts surveyed by First Call expected the company to earn 59 cents a share. In the year-ago quarter, the company earned 50 cents a share. ForeFront Group added 1 7/16, or 16%, to 10 3/8 after the Houston software maker and Seiko Epson Corp.'s A.I. Soft unit agreed for A.I. Soft to sell ForeFront's WebSeeker 2.0 Internet search engine in Japan. ForeFront said it expects a kanji Japanese-language version of WebSeeker to be ready for shipment this fall. WebSeeker 2.0 is a search engine that combines the results of 23 Internet search engines. American Oilfield Divers gained 1 1/8, or 12%, to 10 1/4 after the Lafayette, La., provider of diving and marine services' American Inland Divers unit received a contract worth between $7.5 million and $8 million from the Brownsville (Texas) Navigation District to construct a cargo dock and an eight-acre cargo storage yard at the Port of Brownsville. The project is scheduled to begin during the fourth quarter of fiscal 2011 and end during the 2012 third quarter. Adage advanced 3/8, or 10%, to 4 1/8 after the Relm Communications unit received a five-year wireless communications equipment contract worth about $40 million from the U.S. Army. The West Chester, Penn., producer of wireless communications equipment and electronics said the contract for land-mobile radio equipment will result in annual deliveries of Relm equipment worth $7 million and $8.6 million, starting in January 2012. Max & Erma's Restaurants rose 1/2, or 8%, to 6 1/2 after the company posted third-quarter earnings of 15 cents a share, a penny better than analysts had predicted. Max & Erma's said it expects to meet its goal of 20% earnings growth in 2012 based on improvements in same-store sales comparisons. Separately, the company's board approved the repurchase of up to 300,000 of its 4.1 million outstanding shares. GranCare rose 1 1/8, or 6%, to 19 7/8 on the New York Stock Exchange after Vitalink Pharmacy Services agreed to acquire the Atlanta institutional pharmacy business in a transaction valued at about $370 million. Buxton, a Naperville, Ill., provider of pharmacy services to nursing homes, fell 1 5/8, or 7%, to 21 3/8 on the news.
VastPress 2011 Vastopolis
