Green day for Russell as Fed chair eases inflation concerns

Jennifer Schonberger | Aug 22, 2008 12:03pm EDT | Comment

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After opening higher on the session, small caps accelerated into the green as Federal Reserve Chairman Ben Bernanke eased inflation concerns and oil deflated.

At 12:00 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.44, or 0.89%, at 731.69, while the Dow gained 156.82, or 1.37, to 11587.03.

Bernanke, speaking at a conference for central bankers in Jackson Hole, Wyoming on financial stability, said that recent declines in commodity prices and stabilization of the dollar were “encouraging,” and that although the inflation outlook is uncertain, the Federal Reserve will act as needed to maintain price stability. As Bernanke spoke the gains accelerated in the market.

Adding to the glee, oil has sold off $3.42 a barrel to roughly $117.76 midday, as OPEC announced that it would increase output though anxiety surrounding tensions between United States and Russia remain on the radar.

As oil has deflated, the greenback rallied against the euro and the yen after a sharp dip on Thursday.

In other positive trading catalysts, “The Oracle of Omaha,” Waren Buffett, said on CNBC that stocks are “more attractive” today than they were a year ago and that he currently does not have any bearish bets against the dollar. He also said that he has increased a stake in one of his financial firm investments

Speaking of financials, Lehman Brothers Holdings Inc. (NYSE:LEH), has jumped some 13% on news that a large Korean investor is considering buying the firm.

In broader industry groups, financial services, along with airlines and renewable energy are on the rise midday, while forestry, coal and exploration and production were among those under pressure.

In small cap headlines, shares of Perry Ellis International, Inc. (Nasdaq:PERY) have plunged some 26% after the retailer posted a wider-than-forecasted net loss for the second quarter. The company said a shift in revenue from the second quarter to the third quarter, bankruptcies of certain retail customers in the quarter and increased costs and reduced shipments related to the company’s move to third-party distribution from its facility in Winnsboro all converged to drag down results.

Shares of China Sunergy Co., Ltd. (Nasdaq:CSUN) are shining brightly in midday trading after the Chinese solar cell manufacturer posted second-quarter results that trumped the consensus on Wall Street.During the quarter, the company increased production by 62.7%, improved margins and strengthened its balance sheet.

China Sunergy also reaffirmed its guidance, but noted that, although margins improved in the first half of the year, challenges concerning wafer costs and wafer quality remain. Shares gained some 11%

Pacific Sunwear of California Inc. (Nasdaq:PSUN) has lost nearly one-third its value and sunk to a new 52-week low after four analysts downgraded the stock in the wake of the company’s downward revision of its third- and fourth-quarter guidance. The retailer says it continues to be roiled by the anemic economy.