Russell rises on stimulus hope; oversold momentum

Small-cap stocks pushed higher Tuesday, as investors tried to balance ongoing worries about the economy and corporate profits versus hope for fresh stimulus funds. Short-term oversold conditions likely played a supportive role as well. The Russell 2000 (NYSE:IWM) closed up 4.99, or 1.06%, at 473.79 and is now down 5.1% for the year, while the Dow is off 3.7% and the S&P 500 is down 3.4%.

As the market lurches forward into the earnings season, the picture remains gloomy with Alcoa Inc. (NYSE:AA) kicking off the proceedings Monday after with a larger-than-expected loss and big-cap bellwether General Electric Co. (NYSE:GE) taking a hefty 5.6% hit today amid negative analyst comments. In general, no one is expecting earnings to be a positive story, but if things veer too far south of an already dour forecast, it could generate enough worries to send the market back toward a retest of the lows. All that said, in some ways it’s actually a positive to see the overall market holding up reasonably well today given the slide in GE shares.

Despite the seeming preponderance of negative input again today, small caps held in well throughout the session, perhaps hinting that some investors are willing to take a shot at riskier fare given the recent pullback off the highs. In addition, energy and commodity stocks often have a powerful directional bias on small caps and those sectors were on better footing today.

Crude oil prices closed out the day with a modest gain of $0.19 a barrel, which was off the U.S. trading session highs, but still quite a bit better than losses seen in overseas action. U.S. crude finished up 0.5% at $37.78, underpinned by talk from Saudi officials that they had cut production beyond the scope of previous announcements and by a brutal cold front pushing into the northern Midwest that could spike up . . .

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

Already a member? Please log in below