Tag - Ncem

Small-cap stocks broke out of the gate this week like a rocket as investors cheerfully greeted news of a government takeover of mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 12.92, or 1.80%, at 731.77.

The U.S. government had already inked plans to open credit windows to government-sponsored enterprises like FNM and FRE, but on Sunday the Treasury Department decided more drastic measures were needed, and stepped in to takeover the firms, which investors saw as a big relief to financial shares.

The clear immediate beneficiaries of the news were banks, insurance firms and brokerage firms. Even though preferred stock holdings in FNM and FRE might not be worth much now, the housing loans secured through GSEs should be on better footing for now. Shortly after the open, American International Group Inc. (NYSE:AIG) was up 5%, while Citigroup Inc. (NYSE:C) was up 7% and Bank of America Corp. (NYSE:BAC) was up 8%. The Financial Select Sector SPDR Fund was up 8%, while the PHLX KBW Banking Index was up 7%.

Stock markets around the world embraced the GSE takeover news, with Japan up 3.3%, Hong Kong up 4.2%, Taiwan up 5.5%, Australia up 3.9%, Singapore up 4.4%, South Korea up 5.2% and India up 3.1%, which also helped set the stage for a stunning morning climb in U.S. equities.

Looking beyond the news, it will be interesting to see how the market trades throughout the session from this morning’s immediate bullish reaction. The opening gap left by the overnight rally in stocks was huge — history suggests that an opening gap that is not filled within the first hour of trading often marks an important turning point for markets. Probably the most important trading time frames today will . . .

Nevada Chemicals, Inc. (Nasdaq:NCEM) said late Friday that it will be bought out by Calypso Acquisition Corp., an affiliate of Cyanco Holding Corp. and OCM Principal Opportunities Fund IV, for $13.37 per share. The offer price represents a 36% premium over Nevada Chemicals’ closing price on September 5.

Shares leaped 34%, or $3.33, to $13.13 ahead of the opening. For detailed price information and news stories on Nevada Chemicals, click NCEM.