Tag - NYSE:NCS

Interest rate concerns and inflation worries put pressure on stocks today after the government's sale of $19 billion had a harder than usual time getting buyers. Investors seem concerned about the government's growing debt and that it could spur higher inflation and interest rates.

The Dow lost 24.04 points to close at 8,739.02; the Nasdaq shed 7.05 points to end the trading session at 1,853.08; and the S&P was down 3.28 points for 939.15.

Stocks comprising the Russell 2000, comprised of the 2,000 largest small-cap stocks, brought the index down to 523.41 on a loss of 4.52 points.

Today's small-cap gainers were lead by communications firm Atlantic Tele-Network (Nasdaq:ATNI) up 42.29% at $37.92. ATNI was up on news from yesterday's announcement to acquire wireless assets from Vodaphone (NYSE:VOD) and Verizon Communications (NYSE:VZ). Primarily doing business in the Caribbean, ATNI now picks up nearly a million wireless subscribers in the U.S. southeast and Illinois and Ohio. Because of regulatory requirements on Verizon to sell off some subscribers as part of its deal with Alltell, ATNI is substantially changed from a small operator overseas to a real player in the U.S. market.

Other small-cap leaders include one of yesterday's leaders, Satyam Computer Services (NYSE:SAY) up 35.7% after being rated "overweight" by an analyst from JP Morgan; American Axle & Manufacturing (NYSE:AXL), another of yesterday's leaders, up 25.7%; and Corel Corp. (Nasdaq:CREL) up 34.75%.

Decliners were lead by NCI Building Systems (NYSE:NCS) down 26.1% on worries over its reports of larger than expected Q2 losses. Shares were going for $3.16 at market close, down from an opening price of $3.80.

Other small-cap decliners include one of yesterday's leading gainers, Sequenom (Nasdaq:SQNM). Yesterday SQNM lead small-cap gainers with a 45.97% gain but today lead decliners by shedding 22.83% of its opening price to close at $4.09. And after shedding 20.17% off its price yesterday, Quiksilver (NYSE:ZQK) saw shares drop another 12.71%. So far this week investors holding shares in Quiksilver have endured a total loss of 27% since Friday's close.

*****"The worst is to come…"

That's what MetLife's (NYSE:MET) Chief Investment Officer Stephen Kandarian told Bloomberg this morning.

He was talking about commercial mortgage defaults. He notes that "[t]ypically there's a lag between when the economy softens and when the defaults actually occur."

Bloomberg also cites a study from Real Estate Econometrics LLC that forecasts default rates for commercial real estate may hit 4.1% by the end of the year.

What does commercial real estate have to do with an insurance company? Plenty…

*****Insurance companies take in cash in the form of the premiums we pay. They then invest that money in order to pay off claims down the road. As their investment returns compound, they profit.

But when their investments lose money, trouble starts. And trouble is exacerbated when insurance companies sell guaranteed returns to investors in the form of annuities.

The promise of annuities forces insurance companies to seek riskier investments to boost their returns. And many have turned to mortgage-backed securities to make more money.

Whoops.

*****MetLife has a $300 billion investment portfolio. That portfolio lost 23% in the first quarter of this year. Mr. Kandarian freely admits he's looking for higher returns to make up the losses. And he's looking at adding securities backed by commercial mortgages, in addition to continuing to originate loans to the commercial real estate sector.

It reminds me of the gambler, who after suffering a big loss, decides to start doubling down and taking more risks to win his money back. It usually doesn't end well.

Of course, what he should do is simply step away from the table. But MetLife and other insurers can't -- they have to make money to meet their obligations. It's not a sure thing, but I can imagine it ending poorly for some insurance companies.

Today was a near flat day, with most indices eking out a close in the green a day after Citigroup (NYSE:C) reported that it is still operating at a profit. Some of today’s small-cap gainers were YRC Worldwide (Nasdaq:YRCW), Axsys Technologies (Nasdaq:AXYS) and Innodata Isogen (Nasdaq:INOD).

Other Market Watch highlights today included:

• Stocks navigated choppy trading Wednesday, with the Russell 2000 closing down 1.48, or 0.4%, to 366.27. The Dow closed up 0.05% to 6,929.76, and the S&P 500 closed up 0.24% to 721.35.
• For the year, the Russell is down 26.67%, the Dow is down 21.03% and the S&P 500 is down 20.14%.
• Analysts are warning that the rally seen Tuesday and part of today willl be short-lived due to deep problems etched within the banking industry.
• Oil prices fell more than 7% today as U.S. inventories swelled with surplus crude and traders started to doubt whether OPEC would cut production further.
• Lower tax revenue and massive government spending on the bank bailout pushed the federal deficit to $765 billion in the first five months of the budget year.

Small Cap Gainers:

• YRC Worldwide stock jumped 44.5% on expectations of an improved second quarter for the company. See (Nasdaq:YRCW).
• Axsys Technologies, a manufacturer of defense surveillance and imaging systems, closed up 32.48% after the small cap put itself up for sale in an auction that drew a first round of bids earlier this week. See (Nasdaq:AXYS).
• Innodata Isogen reported a second straight year of record revenue; shares rose 21%. See (Nasdaq:INOD). 

Small Cap Losers:

• NCI Building closed down 38% after posting a Q1 net loss on Tuesday. See (NYSE:NCS).
• WSP Holdings issued FY 2009 guidance below analysts' estimates, sending shares 35% lower. See (NYSE:WH). 
• Online travel website Orbitz tumbled 26% as competitor Expedia waived flight booking fees. See (NYSE:OWW).

The Russell 2000 (NYSE: IWM) and the other major U.S. indices dropped on news that the Fed lowered its target interest rate 0.25%. The small-cap index let go 24.93 points, or 3.15%, to 766.27. The Dow Jones Industrial Average (INDU) lost 294.26 points, or 2.14%, to 13,432.77.

On a year-to-date basis, the Russell 2000 is down 2.69%, while the Dow has advanced 7.68% and the S&P 500 has added 4.31%.

Stocks sank today as investors were apparently disappointed after the U.S. Federal Reserve decided to lower its target for the federal funds rate 0.25% to 4.25%.

“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending,” the Federal Open Market Committee said at about 2:15 p.m. ET, in a statement accompanying the decision. “Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.”

Wall Street was expecting the reduction, with some voices calling on the central bank to act more boldly to prevent the possibility of the U.S. economy falling into recession due to declining house prices and fallout from the meltdown in the subprime mortgage sector.

Small-cap stocks, which opened on a bullish note and were holding on to modest gains, reacted to the news by going on a steep descent.

NCI Building Systems, Inc. (NYSE: NCS) CEO Norman Chambers said the maker of metal products for the nonresidential construction industry is “cautiously optimistic” about earnings growth during fiscal 2008. Chambers made the comments during a midday conference call.

“Our cautious optimism in the face of potentially damaging macroeconomic conditions is based on continuing to improve our operating efficiencies largely through technical systems, process improvements and improving our supply chain management,” Chambers said. “We will focus on growing external revenue but not at the expense of margins. Commercial discipline in this uncertain market will be critical to growing our [earnings].”

For the first half of fiscal 2008 ending in April, the company expects earnings in the range of $0.90 to $1.05 per share, compared with $0.80 per share during the first half of fiscal 2007.

For the entire fiscal 2008, NCI predicts earnings of between $3.35 and $3.70 per share, compared with $3.45 per share in fiscal 2007. Analysts expect earnings of $4.18 per share.

Chambers said the guidance assumes that low-rise, nonresidential construction will continue to decline, by about 6% during calendar 2008.

The Russell 2000 (NYSE: IWM) is posting gains as investors hold their breath ahead of the U.S. Federal Reserve’s decision on interest rates. At 2:01 p.m. ET, the small-cap index was up 3.81 points, or 0.48%, to 795.01.The Dow Jones Industrial Average (INDU) had added 33.09 points, or 0.24%, to 13,760.12.

Stocks are in positive territory as investors wait for the Fed to announce its decision on monetary policy. Financial markets are expecting to see the federal funds rate lowered at least 0.25%. More bullish voices are calling for a decline of 0.50% or even 0.75%.

The U.S. central bank’s target interest rate now stands at 4.5%. In its latest two meetings, the Fed lowered the rate a cumulative 0.75% in order to help the U.S. economy get through a rough patch caused by declining home prices and the financial aftershocks of the subprime mortgage meltdown.

“The U.S. economy is now in the danger zone,” says a report released today by forecasting company Global Insight. The Boston, Mass.-based firm’s “Top-10 Economic Predictions for 2008” shows the U.S. economy showing no growth in the last quarter of 2007 and weak growth during the first six months of 2008.

The Russell 2000 (NYSE: IWM) is higher as investors anticipate the U.S. Federal Reserve will lower its target interest rate.
 
At 10:41 a.m. ET, the small-cap index had climbed 1.86 points, or 0.24%, to 793.06. The Dow Jones Industrial Average (INDU) had declined 20.64 points, or 0.15%, to 13,706.39.

Small-cap stocks are posting modest gains as investors focus their attention on the U.S. Federal Reserve, which is meeting today to decide on monetary policy. Financial markets have recently taken the view that a 0.25% cut in the federal funds rate, the rate at which commercial banks make overnight loans to each other, is a sure bet.

The target interest rate currently stands at 4.5%. The U.S. central bank will announce its decision at 2:15 p.m. ET.

A cut will help boost the economy, which some economists say could fall into recession due to the ongoing slump in the housing sector and the credit squeeze.

Also helping the bulls are solid earnings news from major players.

Telecommunications giant AT&T Inc. (NYSE: T) said that it will buy back up to $15.2 billion of shares. The San Antonia, Texas-based company also said that it expects to see growth in fiscal 2008 earnings.