Small caps continue descent

Will Atkinson | May 05, 2008 1:41pm EDT | Comment

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Small-cap stocks began Monday in the red and have continued slipping in afternoon trading. The wave of selling was partially staved off by a better-than-expected non-manufacturing survey, but has not been able to break the 725 mark since about half-past 10 a.m. ET. At 1:40 p.m. ET, the Russell 2000 (NYSE:IWM) was down 2.35, or 0.32%, at 723.39.

The ISM Non-Manufacturing Survey came out at 52%, which was well above the median forecast of 49.5%, and the highest point since December. The reading also snapped three consecutive months of contractions, which is a plus for the economic outlook.

News that Microsoft (Nasdaq:MSFT) abandoned its takeover bid for Yahoo! (Nasdaq:YHOO) kept investors gloomy during the first session of the week. Yahoo shares dipped on the news, sinking as much as 18% in early trading, but down about 13% in afternoon trading. Several reports over the weekend suggested the deal might go through and Wall Street was evidently disappointed with the end result.

The dollar/commodities inflation front was a source of concern for equity bulls this morning. Crude oil prices jumped back above $117 dollars a barrel overnight on supply concerns out of Nigeria and hostile activities in Northern Iraq.

In addition, the U.S. dollar was soft overnight against both the euro and the yen, which slows excitement that a move out of commodities and into the dollar was underway. In addition to the crude oil spike overnight, soybean and wheat futures were called higher today, and base metals remain on firm footing.

Small-cap shares of note early this morning include Albany Molecular Research (Nasdaq:AMRI), which was up about 15%, gapping higher on solid earnings and STEC Inc. (Nasdaq:STEC), which was up about 16%, also on an earnings-tied boost. On the downside, MAP Pharmaceuticals (Nasdaq:MAPP) was off about 4% without fresh news and Immersion Corp. (Nasdaq:IMMR) was down 4%, also without obvious breaking news.