The Russell 2000 retains modest gains amid quieter ranges

Kevin Pendley | Nov 03, 2008 1:06pm EST | Comment

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Small-cap stocks remained moderately higher into the mid-session time frame, with support from lower inter-bank lending rates and analyst upgrades on key technology and retailer firms offset by a somber reading on manufacturing activity. At 12:53 p.m. ET, the Russell 2000 (NYSE:IWM) was up 3.37, or 0.63% at 540.89.

Analyst upgrades on Biogen Idec Inc. (Nasdaq:BIIB) propped up the tech sector, while an upgrade on Wal-Mart Stores Inc. (NYSE:WMT) underpinned the consumer arena.

Looking at broad market sector activity today, wireless telecoms were the top performers, followed by tire and rubber stocks, multiline insurers, life health insurers, glass and metal container stocks, gold and aluminum. On the downside, casinos were out of favor so far today after posting solid gains late last week. Oil exploration and oil production stocks were down, as were department stores, home improvement retail, automotive retail and oil and gas storage stocks.

Crude oil prices were down about 3%, which likely anchored down energy stocks. The U.S. dollar was firm against the euro, which also hindered upside in commodity products. The Commodity Research Bureau Index of 19 physical markets was off about 0.7%.

The market was trading in very tame fashion today, holding a relatively slim trading range while being devoid of the massive volatility that has been the hallmark of action since mid-September. Perhaps some of the volatility was curbed by traders taking a breather ahead of the U.S. elections Tuesday. In addition, there are still plenty of economic reports to rile things up as the week progresses.

Speaking of economic reports, today’s ISM Manufacturing Survey came in at 38.9%, which was below the forecast of 42.0% and way off the 50% line that denotes contraction in the manufacturing arena. This is yet another release that suggests the economy has already slumped into a recession, yet the market has been able to stubbornly hold on to opening gains through the dreary report.

Although energy stocks were a drag on the overall market, one of the best small-cap performers today was CVR Energy Inc. (NYSE:CVI), which rallied nearly 24%, extending a big rally that started Friday. The firm is set to release earnings Thursday, so there may be some speculative front-running in anticipation of positive quarterly results. Advanced Medical Optics Inc. (NYSE:EYE) surged 24% following solid earnings news from Friday. Arbor Realty Trust Inc. (NYSE:ABR) was up about 42% climbing above the 20-day moving average for the first time in a month.

The Russell 2000 Index itself pushed above the 20-day moving average Friday for the first time since the collapse started Sep. 22. The market faces resistance today at 546.50, then at 550, while support comes in at 526, 520 and 514.50.