Small caps tread shaky waters

Dianna Heitz | Aug 01, 2008 12:31pm EDT | Comment

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Small-cap stocks struggled to stay in the black at mid-session today after being weighed down by a rising crude price and a government report showing the U.S. unemployment rate at a four-year high. At 12:30 p.m. ET the Russell 2000 (NYSE:IWM) was up 0.51, or 0.07%, at 715.03.

Today’s monthly U.S. Labor Department employment report showed unemployment rates had jumped 5.7% from the previous month to the highest level in four years. Part-time workers rose by 291,000, citing a weak economy and job market for taking on part-time employment. On the upside, the United States shed 51,000 non-farm jobs, better than analyst estimates for a decline of 75,000 jobs.

After several days of declines in crude oil prices, the commodity has begun to slowly edge upward. By mid-session, a barrel of light, sweet crude was at just under $126, much higher than the low $120s it was trading at earlier in the week. Statements from Israel’s Deputy Prime Minister Shaul Mofaz that Iran was nearing a “major breakthrough” in its nuclear weapons program and that Israel has to “make sure we are prepared for every option” spurred speculation of an Israeli attack on Iran. In the past, Iran has warned it will block the Strait of Hormuz — an area in which one-fourth of the world’s oil is exported — if attacked.

In large-cap headlines, giant auto manufacturer General Motors Corporation (NYSE:GM) posted a $15.5 billion second-quarter loss as U.S. sales and leases both dropped. The loss was the third largest in the company’s 100 years in business.

Computer server and software manufacturer Sun Microsystems Inc. (Nasdaq:JAVA) fell more than 12% today after reporting a 73% drop in its earnings. The company cautioned that it anticipates further losses in the current quarter because of softness in the current economy. The news dragged other tech stocks down.

Broad market sectors gaining ground today include office supplies; forestry and wood products; printing services; and oil and gas operations. Sectors taking a turn south include iron and steel; construction-raw materials; auto and truck manufacturers; and metal mining.

In small-cap news, radiation therapy product manufacturer TomoTherapy Incorporated (Nasdaq:TOMO) plunged more than 45% today after lowering its 2008 forecast in spite of a narrower second-quarter loss.

Shares of PAETEC Holding Corp. (Nasdaq:PAET) are off more than 37% today after the company lowered its second-quarter revenue outlook. Total revenue for the second-quarter will be between $401 million and $406 million. Wall Street is expecting revenues of $421.9 million.

Navigant Consulting Inc. (NYSE:NCI) dropped 13% today after reporting a second-quarter profit decline after Thursday’s close.

Shares of East Aurora, N.Y.-based Astronics Corporation (Nasdaq:ATRO) have climbed 37% today after the company announced ahead of the opening strong second-quarter earnings and a lifted full-year outlook.

Shares of specialty coffee roaster Peet's Coffee & Tea Inc. (Nasdaq:PEET) are up 20% today after the company posted a 62% jump in its earnings per share after Thursday’s close. For the quarter ended June 29, net income was $3 million, or $0.21 per share, compared with $1.8 million, or $0.13 per share, for the same quarter a year earlier. Net revenue grew 17% from a year ago to $70.1 million.

HMS Holdings Corp. (Nasdaq:HMSY) gained in morning trading after reporting early Friday that its second-quarter profit totaled $5 million, or $0.19 per share, which topped analysts’ expectations of $0.16 per share.