Big rally for small caps
The Russell 2000 (NYSE:IWM) jumped today on news of better-than-expected economic data and hopes that the credit crunch is ending. The small-cap index rose 22.67 points, or 3.30%, to 710.64. The Dow Jones Industrial Average climbed 391.47 points, or 3.19%, to 12,654.36.
On a year-to-date basis, the Russell 2000 is down 7.23%, while the Dow has shed 4.61% and the S&P 500 is off 6.69%.
Stocks opened in the green and the bulls completely dominated the session on news before the opening that UBS AG (NYSE:UBS) will issue up to $15 billion in new stock and receive help from other banks in order to deal with $19 billion in writedowns stemming from the subprime mortgage mess.
Separately, Lehman Brothers Holdings Inc. (NYSE:LEH) announced before the opening that it will raise a higher-than-expected $4 billion in preferred stock.
Investors took the actions as a sign that the credit crunch is easing.
Among the winners today was small-cap Team Inc. (Nasdaq:TISI), which provides maintenance and construction services for high-temperature piping systems. The Alvin, Texas-based company reported after the close on Monday that its third-quarter revenue beat analysts’ expectations.
“It would be misguided to reduce expectations for Team based on performance in this quarter that is below Street estimates,” CEO Philip Hawk said in a conference call today.
In economic news, the U.S. Census Bureau announced after the start of trading that construction spending fell a less-than-expected 0.3% in February.
Elsewhere, a separate report showed that a key manufacturing index increased to a reading of 48.6 in March from 48.3 in February. The numbers indicate a second consecutive monthly decline but came as a surprise to economists expecting the measure to drop further.
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:
• CSK Auto Corp. (NYSE:CAO), up 26% to $11.70 on news it is being sold to O'Reilly Automotive, Inc. (Nasdaq:ORLY).
• The Finish Line, Inc. (Nasdaq:FINL), up 22% to $5.82.
• Power Medical Interventions, Inc. (Nasdaq:PMII), up 22% to $7.32.
• MAKO Surgical Corp. (Nasdaq:MAKO), down 12% to $7.91.
• American Vanguard Corp. (NYSE:AVD), down 10% to $14.97 on news of a disappointing first-quarter forecast.
• MCG Capital Corp. (Nasdaq:MCGC), down 9% to $8.23 on news of an analyst downgrade.
Volume leaders:
• CSK Auto Corp. (NYSE:CAO) 16,817,600 shares traded.
• FairPoint Communications, Inc. (NYSE:FRP) 7,808,400 shares traded.
• InterMune Inc. (Nasdaq:ITMN) 7,269,700 shares traded.
The day saw 14 small-cap stocks set 52-week lows, while 12 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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