Tag - Fr

Software developer Wind River (Nasdaq:WIND) is the small cap leader today posting a 44% gain as of press time, 1:15 P.M. Eastern, on news of its acquisition by industry giant Intel (Nasdaq:INTC).

With the deal expected to close during the summer, Intel has committed to a price of $11.50 per share. As of this writing, shares of Wind River are going for $11.53. This certainly follows my thesis of technology, in addition to healthcare and energy, leading small caps for the foreseeable future.

Another big small cap gainer for today includes investment banker Cowen Group (Nasdaq:COWN) up 28.5% on news of its impending merger with Ramius, LLC, a privately held asset management firm. The new company will retain the Cowen name and is expected to continue trading on the Nasdaq.

Other small cap gainers include First Industrial Realty Trust (NYSE:FR) up 37.9% on news of closing three secured financial transactions for $154 million; Atlas Pipeline (NYSE:APL) up 16.1% to $7.57 (you'll recall Atlas was a big winner yesterday after announcing it's joint venture with Williams (NYSE:WMB). Since Friday's close, Atlas has rewarded investors with a 44% gain.

Small cap decliners include Abercrombie (NYSE:ANF), maker of popular clothing directed to the youth market, posting a loss of 10.6% in today's trading after reporting same store sales had fallen 28%; Northeast Bancorp (Nasdaq:NBN) of Lewiston, Maine, down 14.7%; and The Gap (NYSE:GPS) down 7.9% on reporting that sales fell 6% versus one year ago.

All major indices are reporting positive gains as of press time with the Russell 2000 Index up 1.12% to 528.56, the Dow up 0.70% to 8,735.80, the S&P 500 up 0.96% to 940.74, and the Nasdaq up 1.07% to 1,845.37. Analysts attribute much of this to reports showing that the number of unemployed still receiving benefits dropped unexpectedly for the first time in nearly five months.

Also big in today's news was crude oil hitting another high for 2009. New York Mercantile Exchange oil hit $69.56 in earlier trading today, meaning that crude oil is now nearly twice as expensive as it was in February.

Note: I've recently released a report on three small cap oil plays that will take advantage of crude oil's drive to even higher prices this year. In fact, one of these stocks has already given investors a nice 148% gain since we added it on March 30th. And there's still more action with this and the other two stocks. You can request your copy of the report HERE.

*****Yesterday, Ben Bernanke told the House Budget Committee:

"In recent weeks, yields on longer-term Treasury securities and fixed-rate mortgages have risen…[t]hese increases appear to reflect concerns about large federal deficits…"

Hmmm. I would swear that Treasury Secretary Geithner just told China that rising interest rates were a sign of optimism for the U.S. economy. Can rising rates be both good and bad? All I know is that if you listen to government long enough, anything and everything is possible.

Rising interest rates on Treasury bonds mean that prices are falling. Whether you're talking dollars or doughnuts, prices tend to fall when there's oversupply. And right now, with the Federal government raising trillions to fund stimulus spending and budget deficits, there's a more-than-adequate supply of T-bills.

Competition also affects interest rates, or yields, on T-bills. If the arcane valuation formulas running on server banks in the basement of some hedge fund say that the stock market is likely to post an 8% gain, few managers will get too excited about the 5% return on long bonds. That 5% yield must rise (with the price of the bond falling) to entice buyers.

So when Geithner says that rising yields indicate optimism, he's telling the truth to a degree. Yes, now that the economy is recovering a bit, investors believe that stocks are a better investment than bonds. And that's good. But one reason stocks are attractive is because bonds are so unattractive.

*****I suspect the Chinese know all this. They probably also know that they benefit by lending us money. Heck, if Chinese money delays the hard choices long enough, they may ascend to the throne of world's largest economy sooner than expected. 

*****Bernanke also took the opportunity to warn Congress about rising deficits. He said "Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."

Let's not forget Bernanke has supported the policies that got us where we are. Now let's see what he proposes to help get us out of this mess.

*****The last time I made the observation that the news cycle was turning negative, we saw stocks consolidate their recent gains, instead of turning lower.

Well, it seems to me that the news cycle is starting to turn negative again. 

Bernanke repeated his belief that the recession is ending, but the financial media chose to latch on to his statement that recovery will be slow. Improving manufacturing data was deemed "not-as-good-as-expected."

Will this lead to a sell-off, another period of consolidation, or will more positive data emerge to keep the markets moving higher? I don't know, but I am on alert…

That's it for today.

P.S. One way to help insulate your portfolio (particularly if you're retired or even if it's a few years off) from the government's loose monetary policy is by holding dividend stocks. These stocks give you a regular payout and have tremendous upside. Be sure to check out my new research report with five such winning stocks right now. You can get it HERE.

Small-cap stocks extended the morning rout into midday trading, pulled down by renewed worries about the economy following the worst decline in October retail sales on record, which only heightens fears about consumer spending moving into the key holiday season. At 2:16 p.m. ET, the Russell 2000 (NYSE:IWM) was down 4.29%, on target for the third-lowest daily close in more than five years and the lowest weekly close since August 2003 despite the dramatic recovery explosion from Thursday.

Energy and technology stocks were among the dominant drags on the market, with the Energy SPDR off nearly 5% and the tech-laden Nasdaq 100 down about 4.5%. Within the tech arena, anything tied to the cell phone business was getting hammered following Nokia’s warning that sales would fall far below expectations in coming months. Nokia Corporation (NYSE:NOK) was down 12%, Motorola Inc. (NYSE:MOT) was off 8% and QUALCOMM Inc. (Nasdaq:QCOM), the largest mobile phone chip maker, was down 6%.

Back on the commodities theme, crude oil prices were down about $1.60 a barrel, as worries about global demand persist. Despite the pullback on energy prices, commodities overall were hanging in there today, with the Commodity Research Bureau Index basically flat at mid-session. In general, commodities are way oversold and the U.S. dollar tone is mixed today (up versus euro, down versus yen).

As for retailers, today just isn’t pretty. The S&P Retail Index is down 6% and a host of name-brand companies released earnings today that were either disappointing, or even when solid for the third quarter reflected downward guidance for the coming quarter. Nordstrom Inc. (NYSE:JWN) was down 8%, JC Penney Company Inc. (NYSE:JCP) was down 9% and although the pain was intense for apparel oriented retailers, there was plenty of agony to go around; for instance, home improvement retailer . . .

Small caps closed up nearly 5% today, marking the third consecutive higher close, which has not happened since Sept. 12. Today’s small-cap gainers are First Industrial Realty (NYSE:FR), Horizon Lines (NYSE:HRZ) and Conceptus, Inc. (Nasdaq:CPTS).

Other Market Watch highlights today included:

• Small caps show bottoming promise on daily studies, but will need a strong close Friday to suggest any decent reversal formation on weekly time frames.  
• Sectors doing well today included airlines, homebuilders and consumer staples.  
• Insurance, merchandise stores, casinos and leisure products companies all struggled today.  
• Crude oil prices were actually off $1.54 to $65.96 and the Commodity Research Bureau Index of 19 physical markets was down 2.8%.  
• Gas utilities, oil and gas storage and oil and gas drilling stocks were among the best-performing broad market sectors.  
• The market continues to nod with approval at the string of declines on inter-bank lending rates, which suggest that confidence is growing between banks on the lending front.  
• The GDP report released today marked the steepest contraction in seven years and reflected the first quarterly decline in consumer spending since 1991. 
• Economists are unanimously calling for things to get quite a bit worse in the fourth quarter.

Small Cap Gainers:

• Horizon Lines Inc. shares up 43%, trying to mount a comeback after sinking to 52-week lows a few days ago. See (NYSE:HRZ).  
• Conceptus, Inc. rallies 47%, also getting an earnings boost as the birth control firm saw net sales up 62%. See (Nasdaq:CPTS).  
• First Industrial Realty Trust Inc. soars 54% on solid quarterly earnings See (NYSE:FR).  
• Brazilian pulp and paper product company Votorantim Siderurgia maintains expansion plans, shares rise 21%. See (NYSE:VCP).  

Small Cap Losers:

• Polypore International reports Q3 results, company downgraded to "neutral." Shares plummet over 38%. See (NYSE:PPO).
• Protective Life Corp. careens 14.5% on higher-than-average volume. See (NYSE:PL).  
• Automotive supplier Lear Corp. swings to Q3 loss amid lower N. America, Europe auto output. Announces it will make more salaried job cuts. Shares down 10.4%. See (NYSE:LEA).  
• Mobile equipment maker Sauer-Danfoss sees a rise in Q3 profit, cuts FY08 earnings guidance. Shares are down 24%. See (NYSE:SHS).  

Small caps continue to trade in the green midday, though off their highs of the session, after GDP was not as bad as feared. Today’s small-cap gainers are Horizon Lines (NYSE:HRZ), First Industrial Realty Trust (NYSE:FR) and Sonic Automotive (NYSE:SAH).

Other Market Watch highlights today included:

• Advancers were leading decliners by nearly 6 to 1 on the Russell 2000 after the first hour of trading.  
• Norway also joined in on the rate cut fervor as countries around the world toss cheap money at businesses in a drive to thaw frozen credit lines.  
• Hong Kong shot up some 10% and Taiwan was up 6%, as those countries announced rate cuts following the Fed’s rate cut Thursday.  
• Stock markets around the world were in rally mode overnight, with the world stock index up 2.5%, powered by steep gains in some Asian markets.
• Crude oil futures trimmed overnight gains and were hovering near steady levels on the stock market opening.

Small Cap Gainers:

• Shares of shipping company Horizon Lines are up 51%. Goldman Sachs downgraded the stock on Monday to "sell" from "neutral." See (NYSE:HRZ).  
• Shares of First Industrial Realty Trust are up 27% as it reports Q3 profit drop and cuts dividend. See (NYSE:FR).  
• Sonic Automotive shares up 24% as it reports losses in Q3. See (NYSE:SAH).  
• Auto parts supplier Tenneco to cut 1,100 jobs as global auto sales slide. Shares are up 20%. See (NYSE:TEN).  

Small Cap Losers:

• Sauer-Danfoss misses on Q3 earnings, issues cautious outlook. See (NYSE:SHS). 
• Brocade and Foundry Networks to amend merger terms: Foundry's shareholders to receive $16.50 in cash for each share. See (Nasdaq:FDRY).
• Astronics posts decline in bottom-line on higher engineering, development spending, higher manufacturing costs. (Nasdaq:ATRO).  
• Polypore International beats on Q3 results, guides full year revenues below the Street, EPS straddle consensus. See (NYSE:PPO).