Tag - CLMS

Protective Life Corp. (Nasdaq:PL), Student Loan Corp. (Nasdaq:STU) and Horace Mann Educators Corp. (Nasdaq:HMN) are among the new 52-week lows in Thursday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Max Capital Group Ltd. (Nasdaq:MXGL), Independence Holding Co. (Nasdaq:IHC), Advanced Medical Optics Inc. (Nasdaq:EYE), Park-Ohio Holdings Corp. (Nasdaq:PKOH), Calamos Asset Management Inc. (Nasdaq:CLMS) and Sunrise Senior Living Inc. (Nasdaq:SRZ).

Here are the new 52-week lows among small caps:

Small-cap stocks reversed course Friday, erasing much of the steep gains from Thursday as monthly employment data served up a shocking rise in the jobless rate and crude oil prices exploded to new record highs. The Russell 2000 (NYSE:IWM) shed 22.90, or 3%, to 740.37, ending a volatile week in dizzying fashion. The abrupt decline Friday registered the largest one-day percentage loss since March 6, and marked just the fourth time this year that small caps tumbled 3% in one day.

One could argue that today’s morning setup brewed up a “perfect storm” for stock market declines. Equities came into the session ripe for a bad news surprise following an overdone rally Thursday, and when the unemployment rate shockingly rose to 3½-year highs, it triggered a rout on the U.S. dollar, which in turn fueled a dramatic surge in crude oil prices.

“I think today’s decline was a combination of negative factors: we took out the short base during Thursday’s rally, the jump in oil is negative for the economy via poor growth and inflation, there are rumors of Israel attacking Iran and the labor market is weak,” said Nick Kalivas, vice president of financial research with MF Global, in an email interview with SmallCapInvestor.com.

Today’s monthly employment report showed a baffling jump in unemployment to 5.5%, way beyond the median forecast for a mild rise to 5.1% from 5% the previous month. In fact, the last time the unemployment rate jumped 0.5% in one month took place 22 years ago. Data spin doctors explained away the rise as a sudden surge in college and high school students out looking for summer jobs, or as the number series simply “catching up” with the weak job picture. While the summer job explanation plays well, it’s worth noting that this data is seasonally adjusted, and it’s not as if we’ve never had college kids looking for work in May before. However, some economists cautioned that collection time-frame quirks this go around may have moved a bunch of the summer job crowd up into the May report from June. If so, then a dip in the jobless rate should be seen in next month’s employment data.

“The labor market is under severe stress, firms have stopped expanding payrolls, (there is) no ambiguity here,” Asha Bangalore, economist with Northern Trust, said in an email.  “The National Bureau of Economic Research could take several more months to declare an official onset of a recession, but there is no doubt the U.S. economy is experiencing one. The Fed will not raise the federal funds rate until the unemployment rate falls, [but] the unemployment rate has not even peaked yet, so considerations of a higher federal funds rate by year-end appear far-fetched,” Bangalore . . .

Small-cap stocks opened lower, pulled down by a surprising jump in the unemployment rate, which climbed to 5.5%, the highest rate in 3 ½ years. At 9:53 a.m. ET, the Russell 2000 (NYSE:IWM) was down 7.37, or 0.97%, at 755.90.

The headline non-farm payroll figure came in at minus 49,000, which was better than the forecast for a slide of 58,000, but the payroll figure was upstaged by the stunning jobless rate number. Economists had forecast a rise in the unemployment rate to 5.1% from 5%, and a jump of 0.5% is extraordinarily rare. In fact, this marked the biggest monthly jump in the unemployment rate in 22 years.

“The unemployment rate soared in May because of huge surge in the labor force, perhaps because of seasonal adjustment difficulties associated with the ending of the school year,” Steven Wood, chief economist with Insight Economics, said in an email report. “However, this big increase may also have been a catch-up from its slow rise in the past few months. In any event, the number of unemployed has increased by 1.6 million to 8.5 million and the unemployment rate has increased by 1 percentage point to 5.5%. In the post World War II period, every time the unemployment rate has jumped by a full percentage point in the course of a year, the economy has slipped into recession.”

Even the headline figure, which might have been embraced by equity bulls if not for the unemployment rate surge, wasn’t exactly a sign of great things. According to Wood, “The bottom line is that jobs declined in May and the economy has clearly slipped into a mild jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy. Persistent job losses will eventually pull the overall economy into recession.”

This was the kind of head-scratching, out-of-leftfield numbers surprise that can hatch an entire cottage industry of data conspiracy theorists. For now, traders and analysts tilted toward the bullish side of things were explaining away the sudden jump . . .