Small caps higher on firm dollar, soft crude oil

Kevin Pendley | May 12, 2008 10:05am EDT | Comment

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Small-cap shares opened higher Monday, lifted by advances in overseas equity markets, a firm U.S. dollar and a dip in crude oil prices. At 9:55 a.m. ET, the Russell 2000 (NYSE:IWM) was up 0.86, or 0.12%, at 720.91.

The U.S. dollar was up nearly 1% against the yen into the market open, and pushed about 0.2% higher versus the euro. The firm dollar tone was linked to a $2-per-barrel pullback in crude oil futures, which came off Friday’s record highs amid profit-taking.

Financial shares could find a boost this morning from a jump in the largest European bank HSBC, which climbed about 2% overnight on profit news. Early on this morning, Citigroup (NYSE:C) was up 0.6% and Bank of America (NYSE:BAC) was up about 0.8%. Other large-caps of note included Wal-Mart (NYSE:WMT), which was up 1.2% shortly after the opening on optimism ahead of earnings. Research in Motion (Nasdaq:RIMM) jumped 2.4% on news that the company was unveiling a new BlackBerry Bold Smartphone.

A massive earthquake in China overnight caught trader attention, but a lack of details seemed to leave the market without a feeling for whether or not it would have an impact on equities in the United States.

Looking ahead to this week’s action, the economic calendar picks up steam after a relatively tame risk quotient last week. Not only will the market have to navigate through a batch of important data on retail sales, inflation and housing starts, but there is a glut of Federal Reserve speakers on the docket.

Speaking of Fed speakers, Chicago Fed President Charles Evans was the first one up to the plate this morning, saying that housing was still a drag on the economy, and that growth risks were to the downside, but inflation risk was on the upside. He said that U.S. growth should improve in the second half of the year, but that tight credit markets would crimp near-term GDP. Stock index futures edged slightly higher through a run of Evans’ headlines on the wires, and Fed Chair Bernanke will talk Tuesday morning, which could generate more of a stir among traders.

From a charting perspective, the Russell faces intraday resistance at 726, then the key point is at 731, which turned back the bulls in early February and again here on the April rally. On the downside, 720.50 is immediate support, then 713.50 and 708.

Among broad market sectors, refining and marketing firms were higher, as were insurance brokers and electrical retailers. On the downside, oil and gas drillers, coal and casinos were attracting sellers.

Individual small-cap stocks making a big morning move included Radyne Corp. (Nasdaq:RADN), which shot up some 45% early on brisk volume on takeover news. Preformed Line Products (Nasdaq:PLPC) climbed over 12%, apparently tied to earnings from Friday and Molecular Insight Pharmaceutical (Nasdaq:MIPI) rallied over 12% without fresh news. On the downside, Gencor Industries Inc. (Nasdaq:GENC) was down 26%, gapping lower on earnings and Cumulus Media Inc. (Nasdaq:CMLS) was off over 16% on news that a merger was terminated.

Small caps slated to unveil earnings today after 11:00 a.m. ET include: PMI Group Inc. (NYSE:PMI), Kenexa Corp. (Nasdaq:KNXA), Sun Communities Inc. (NYSE:SUI), GAIAM Inc. (Nasdaq:GAIA), Standard Pac Corp. (NYSE:SPF), Indymac Bankcorp Inc. (NYSE:IMB), NXStage Medical Inc. (Nasdaq:NXTM), JER Investors Trust Inc. (NYSE:JRT), Alexza Pharmaceuticals (Nasdaq:ALXA), Imperial Sugar Co. (Nasdaq:IPSU), Toreador Resources Corp. (Nasdaq:TRGL), Bank United Financial Corp. (Nasdaq:BKUNA), Building Materials Holding Corp. (NYSE:BLG), NY Horizons Electronics Corp. (Nasdaq:NUHC), Actividentity Corp. (Nasdaq:ACTI), Progressive Gaming International Corp. (Nasdaq:PGIC), Medifast Inc. (NYSE:MED), NMS Communications Corp. (Nasdaq:NMSS), Stamford Industrial Group Inc. (OTC:STMF) and Origen Financial Inc. (Nasdaq:ORGN).