Russell 2000 soars

Alex Alexandrov | Nov 13, 2007 5:03pm EST | Comment

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Small-cap stocks jumped nearly 3% today, propelled by surprise earnings from Wal-Mart and an easing of credit fears. The Russell 2000 (NYSE: IWM) added 22.06 points, or 2.88%, to 789.15, snapping a two-day losing streak. The Dow Jones Industrial Average (INDU) gained 319.54 points, or 2.46%, to 13,307.09, its first rise in four sessions.

On a year-to-date basis, the Russell 2000 has advanced 0.22%, while the Dow has risen 6.67% and the S&P 500 has added 4.55%.

Trading got off to a bullish start this morning on news that Wal-Mart Stores Inc. (NYSE: WMT) saw a 7.9% increase in third-quarter profit at its U.S. stores, while revenue rose 8.9%.

The result pleasantly surprised analysts and eased fears that the U.S. consumer was cutting back on spending. Americans do about 10% of their shopping at the Bentonville, Ark.-based retailer, which began offering discounts two weeks earlier than last year to lure customers.

Stocks were gaining momentum, with the Russell 2000 adding more than 1% within the first 30 minutes of trading.

The bears had no chance, even after Bank of America Corp. (NYSE: BAC) said that it projects a fourth-quarter pre-tax charge of $3 billion due to its purchase of collateralized debt obligations that have plummeted in value because of the stagnating U.S. housing market. Collateralized debt obligations are loans—such as mortgages—that are pooled together and sold to institutional investors as a package.

The real story was Goldman Sachs Group Inc. (NYSE: GS), which announced that it doesn’t plan any significant writedowns on mortgage-related assets. That’s a welcome sign that shocks from this summer’s subprime mortgage meltdown may be coming to an end.

Partially as a result of the news, equities spent the second half of the session on a steep upward trajectory.

Separately, the National Association of Retailers reported after the start of trading that its index of pending home sales unexpectedly rose 0.2% in September, the first increase since June.

However, existing-home sales are forecast at 5.67 million in 2007, compared with 6.48 million in 2006. Sales of new homes are also projected below their 2006 level.

Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Triad Guaranty Inc. (TGIC), up 30% to $9.27. A company representative could not be reached for comment.
• Xerium Technologies Inc. (XRM), up 23% to $5.85 on news its CFO bought 25,000 shares on the open market, raising his stake to almost 25%.
• BIDZ.com Inc. (BIDZ), up 22% to $17.80 on news of a rise in third-quarter profit.

Biggest percentage losers:

• TravelCenters of America LLC (TA), down 28% to $17.16 on news it swung to a third-quarter loss.
• Akeena Solar Inc. (AKNS), down 25% to $5.50 on news of a wider third-quarter loss.
• ISTA Pharmaceuticals Inc. (ISTA), down 12% to $5.59 after shares rose on Monday when its drug candidate received positive study results.

Volume leaders:

• Powerwave Technologies Inc. (PWAV) 5,149,100 shares traded.
• MGIC Investment Corp. (MTG) 5,085,600 shares traded on speculation that investors are looking to buy the insurer’s stock.
• Nektar Therapeutics (NKTR) 4,028,100 shares traded on news it has resolved contractual issues with Pfizer Inc. (PFE).

The day saw 33 small-cap stocks set 52-week lows, while 11 small caps established 52-week highs.