Mild dip; lagging big caps with weak financials

Small-cap stocks drifted lower into mid-session, unable to keep pace with mild gains in large-cap indices as smaller banks and financial firms were a drag on the Russell 2000 (NYSE:IWM). At 12:17 p.m. ET, the Russell was down 0.60, or 0.13%, at 449.02.

Losses were limited by a surprisingly stout rise in pending home sales, which were up 6.3%, compared with market expectations for a flat number. Homebuilder stocks seemed to get a lift from the number, with the ISE Homebuilder Index rising 5.2%. Small-cap homebuilder KB Home (NYSE:KBH) was up 6.8%, while Meritage Homes Corp. (NYSE:MTH) was up 10.9%.

The Federal Reserve also announced plans to keep programs on commercial paper operations running for a longer time frame, which was a supportive element for the market. Despite those two upbeat news items, bank stocks were a major drag on the market, with the KBW Banking Index off about 4.1%.

Earnings were a mixed bag today, but expectations are so low on the profit front, that any sign of mild upside surprises is embraced by investors. Drug maker Merck & Co. (NYSE:MRK) beat the estimate and was a big supportive element for the Dow index. Drug stocks in general were outpacing the overall market, with the AMEX Pharmaceuticals Index up 1.6%.

Looking at sector activity, motorcycle manufacturers were a top performer today, but the large automakers were in retreat mode as they release sales numbers today. General Motors Corp. (NYSE:GM) was down 6.1%, while Ford Motor Co. (NYSE:F) was down 3.1%. Personal products companies, steel stocks, coal firms and general merchandise stores were all doing well today. On the downside, the . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below