Firm airlines, retailers counter weak financials

Kevin Pendley | Nov 17, 2008 1:10pm EST | Comment

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Small-cap stocks pushed higher into mid-session, supported by gains in airlines, retailers and energy stocks. Small-caps were firm relative to large-cap stocks which were pulled down by big financials and tech companies. At 12:45 p.m. ET, the Russell 2000 (NYSE:IWM) was up 3.64, or 0.80%, at 460.16.

The market was sharply divided today, with strong gains seen for several sectors, but big losses offsetting in other sectors, which had cumulative effect of keeping index movement relatively stable. Financial shares continue to be a drag on large-cap indices, with the Financial SPDR Fund off about 2%, with Bank of America (NYSE:BAC) and Well Fargo & Co. (NYSE:WFC) both down in the 2% range.

Among airline stocks, UAL Corp. (Nasdaq:UAUA) was up 7% while US Airways Group Inc. (NYSE:LCC) was up 5% and Continental Airlines Inc. (NYSE:CAL) was up 4%. Crude oil prices pulled higher amid talk of OPEC cuts and the hijacking of a big Saudi oil freighter, but the move was relatively tame and not enough to spook airline stocks. The U.S. dollar was down more than 1% against the euro, which also helped the tone in commodity stocks. General Motors Corp. (NYSE:GM) was up about 11% as the automaker continues to benefit from expectations that the U.S. government will extend a helping hand to carmakers.

The bearish story on the technology front today was supposed to be Dell Inc. (Nasdasq:DELL) following an analyst downgrade, but the PC-maker was actually up 1% at midday, so the woes in tech stocks were linked to other concerns.

Individual small caps in rally mode today included Targanta Therapeutics Corp. (Nasdaq:TARG), which jumped 34% on news that an FDA committee will review the firm’s new application for skin infections. CTS Corp. (NYSE:CTS) rallied 22% as the electronics manufacturing firm climbs out of the 52-week lows set during last week’s slide. China Southern Airlines Co. Ltd. (NYSE:ZNH) was up 16%, bolstered by reports that Chinese airlines will seek government assistance. Theravance Inc. (Nasdaq:THRX) climbed 15% as the company said that a skin infection drug showed capability to fight deadly bacteria, even though the FDA said that the drug might be related to the deaths of some patients under treatment of the drug. On the downside, Central European Media Enterprises Ltd. (Nasdaq:CETV) slumped 21%, tumbling to fresh 52-week lows following analyst downgrades last week.

The mild upside bump so far today in small caps is a nice reprieve off the weak close Friday, but does little to influence chart patterns. A move through 464 would be a bigger deal because there isn’t much in the way of resistance above that point until closer to 480. Conversely, if the market falters this afternoon, then support will be at 450, then at 442.