Big leap for small caps
The Russell 2000 (NYSE: IWM) posted a large gain and outpaced the other major U.S. indices on good news from bond insurers. The small-cap index added 15.03 points, or 2.16%, to 710.46. The Dow Jones Industrial Average (INDU) climbed 189.20 points, or 1.53%, to 12,570.22.
On a year-to-date basis, the Russell 2000 has retreated 7.25%, while the Dow is down 5.24% and the S&P 500 has declined 6.58%.
Stocks ended the session with a surge on news that rating agency Standard & Poor’s reaffirmed the Triple A rating of bond insurers MBIA Inc. (NYSE: MBIA) and Ambac Financial Group, Inc. (NYSE: ABK).
The past couple of weeks had seen speculation that the companies will be downgraded, a move that will create problems for banks that have invested in bonds and probably lead to more losses due to writedowns on subprime mortgages.
Separately, several banks are planning a $3 bailout of Ambac Financial Group.
The two bond insurers had insured subprime-mortgage debt and are suffering the consequences of the ongoing stagnation in the U.S. housing sector.
Speaking of housing, the National Association of Realtors reported after the start of trading that sales fell 0.4% to an annualized rate of 4.89 million units, down from an upwardly revised 4.91 million units in December.
Investors actually took that as bullish news because economists were expecting to see a fall to an annual rate of 4.80 million units.
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:
• China Shen Zhou Mining & Resources Inc. (SHZ), up 52% to $9.04.
• GTx, Inc. (GTXI), up 36% to $17.59 on news of positive results from a drug trial.
• Cardiome Pharma Corp. (CRME), up 26% to $7.70.
• Michael Baker Corp. (BKR), down 24% to $27.57 on news it is being investigated for securities fraud.
• Atrion Corp. (ATRI), down 17% to $108.00 despite news of a rise in fourth-quarter earnings.
• Smith Micro Software, Inc. (SMSI), down 13% to $5.62 on news of an analyst downgrade.
• GTx, Inc. (GTXI) 7,540,600 shares traded.
• Pier 1 Imports, Inc. (PIR) 4,299,400 shares traded.
• Smith Micro Software, Inc. (SMSI) 4,100,700 shares traded.
The day saw 20 small-cap stocks set 52-week lows, while 16 small caps established a 52-week high.
About the Author
Reporter Alex Alexandrov is based in SmallCapInvestor.com's Washington, D.C. bureau.
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