Tag - Pfe

Stocks are down as of press time, 12:00 P.M. Eastern. The Dow is down 17.08 points at 9,263.89; the Nasdaq is at 1,979.74 and quickly retreating from it's Tuesday closing high of 2,009.40; and the S&P 500 is down below 998.82.  

Most active small-cap decliners in the morning session include Orthovita (Nasdaq:VITA) down 29%; Health Fitness Corporation (AMEX:FIT) down 26%; and Sunrise Senior Living (NYSE:SRZ) down 23%. 

Small-caps bucking the trend and actively rising include a former SmallCapInvestor.com PRO holding, SXC Health Solutions (Nasdaq:SXCI) up 28% on reporting Q2 2009 EPS numbers 41% higher than the year ago period and raising guidance for 2009 with an EPS of $1.70, up from $1.62.  

Other small-cap gainers in the morning session include Home Inns & Hotels Management (Nasdaq:HMIN) up 25% and Ambac Financial Group (NYSE:ABK).

*****Yesterday, the Challenger jobs report showed more jobs were lost in July than expected. It wasn't a big miss, but it was a miss. And after buyers stepped in early, the market's reaction wasn't a big one, either. By the end of the day, the Dow Industrials lost 30-some points.  

I've been pointing out how the market just doesn't seem to have much downside. Yesterday's job loss news wasn't a disaster, but it wasn't good. But investors stepped in and pushed stocks well off their lows.  

The Fed has made money cheap, and it's going into the stock market. There's been a lot of talk that there's a stock market bubble in China because investors there are putting money from government stimulus efforts into the stock market. Nobody's saying that about the U.S. stock market, but that is what's happening. 

This is the "false trend" I was referring to with the George Soros quote from the other day. We should understand that this trend will most likely be proved false at some point. The question is, when? 

*****Today, jobless claims came in lower than expected. That's going to put stocks on better footing. Of course, continuing claims rose. But investors are having the sense that the U.S. economy is stabilizing, so they are buying stocks.   

In my Recovery Portfolio, I'm about to lock in a virtually risk-free 14% gain on drug maker Wyeth (NYSE:WYE). Pfizer (NYSE:PFE) announced that it would acquire Wyeth on January 6 in cash and stock deal. I bought Wyeth when Pfizer stock was low. My purchase price was essentially locked in by the acquisition terms. There was nothing but upside. And as Pfizer has recovered along with the market, my investment in Wyeth has done well.  

If you'd like to learn about the "aggressive approach to conservative investing" that's driving my Recovery Portfolio, please click here. 

*****Cisco (Nasdaq:CSCO) CEO John Chambers is one of the best CEOs there are. He's a straight-shooter, telling investors "…not to get too far ahead of themselves…" concerning Cisco's earnings report and forecast.  

In a nutshell, the last quarter was pretty good for Cisco, but the company still faces challenges. His advice is valid for all investors. Just check the retail sales data out this morning. The economy may be stabilizing, but retail is experiencing challenges. Sales were down around 5% across the board. And that trend has been in place for months.  

Let's not get too far ahead of ourselves.  

******Treasury Secretary Timothy Geithner claims the government made a 23% profit on its bailout of Goldman Sachs (NYSE:GS). Now, Morgan Stanley is about to buy back a warrant it sold the government for $950 million.  

There's no word what the government's profit is on this, but there should be no doubt that there is one. And that's how it should be, so far as I'm concerned.  

If these banks need money, the government shouldn't be a lender of last resort. It's an investor, and should be rewarded. And don't forget, favorable government policies are allowing banks to profit. So again, the government should be rewarded for the risk it takes.  

*****Yesterday, my first monthly column appeared in The Burlington Free Press, the daily newspaper in the state of Vermont. The first column is Investing in Vermont: Profits await clean energy investors. In this column I discuss investing in the clean energy sector, and offer readers three ideas - including two mutual funds and one ETF. You can read the column by clicking here.  

*****The Managed America web video conference is coming up next Monday, August 10 at 6:00 P.M. It's free to attend and you can register right now. Click here to register for this free online event.  

Ian Wyatt

Editor

Daily Profit 

P.S. Don't forget that with tomorrow's edition we'll once again bring back Jason Cimpl, lead technical analyst from TradeMaster Daily Stock Alerts to give you his assessment on the market and his call for next week's trades. You can catch a replay of last Friday's video: click here.

Stocks moved higher today after several positive reports reversed early downward trading trends. Investors initially drove down stocks on news that first time unemployment claims increased by 15,000 last week.

Gains were made in homebuilders like Lennar (NYSE:LEN), KB Homes (NYSE:KBH), and Toll Brothers (NYSE:TOL) as well as retailers like Bed Bath & Beyond (Nasdaq:BBBY), Kirkland's (Nasdaq:KIRK), and Pier One (NYSE:PIR). Both sectors have seen bankruptcies (Linens and Things, Circuit City, among others) and layoffs over the past year as the souring economy has brought housing starts to a crawl and forced consumers to pull back in discretionary spending.

The broader indexes were up today with the Dow finishing at 8,472.40, the Nasdaq showing positive gains to close up 37.2 points to close at 1,829.54, and the S&P 500 posting a 2.14% gain to close at 920.26.

Small-cap stocks in the Russell 2000 helped propel that index 2.87% to close at 509.14 today.

Leading small-cap gainer was Jazz Pharmaceuticals (Nasdaq:JAZZ) up 37% on news that the late-stage results for its fibromyalgia drug had met the company's main goal. The drug, Xyrem, is scheduled to be submitted for marketing approval. Gains in Jazz shares outpaced gains made by other, better known, pharmaceutical manufacturers including Pfizer (NYSE:PFE), Merck (NYSE:MRK), and share price losses posted by GlaxoSmithKline (NYSE:GSK).

As we've mentioned in previous updates, this follows a general trend of sector rotation as investors are looking for more defensive plays, like healthcare and pharma, over the summer.

Other small-cap gainers for today include CPI International (Nasdaq:CPII) up 32%; Tween Brands (NYSE:TWB) up 27% on news that Dress Barn (Nasdaq:DBRN) will buy it for roughly $157 million in stock; Royale Energy (Nasdaq:ROYL) up 32.5%, an energy company involved in development and exploration of natural gas and oil in California, Texas, and the Rocky Mountain region.

Small-cap decliners were lead by medical oral diagnostics maker OraSure Technologies (Nasdaq:OSUR) down 23% on news that it needs to conduct more additional clinical trials to get approval for its hepatitis C virus test. The exact timing and costs for these additional tests have not been disclosed by OraSure and investors drove down share prices based on this uncertainty.

A number full of other small-cap stocks were big decliners today including data marketing services provider Acxiom Corporation (Nasdaq:ACXM) down 22%; Capital Bank Corporation (Nasdaq:CBKN) down 20%; and Cordorus Valley Bancorp (Nasdaq:CVLY) down 19%.

The Fed has spoken. Interest rates are not going higher anytime soon. And the Fed announced no change to its $1.75 bond purchase program. Bonds sold off, suggesting that traders hoped the Fed would do more to put a floor under prices.  

The Fed made it a point to say that "…inflation will remain subdued for some time." But the Fed also hasn't made any comments about target levels of inflation, or what levels of inflation would make it uncomfortable. With the amount of money being pumped into the system, this is a concern to me. Especially with commodity prices rising and the spread between 10-year Treasuries and 10-year inflation adjusted bonds (TIPS) increasing over the last month.  

*****Nothing will kill whatever recovery the Fed and others see coming faster than higher interest rates fueled by inflation fears.  

Most signs point to an imminent economic recovery. No one thinks it will be strong. But two straight months of increase for Durable Goods orders has most convinced that recovery, and a small level of inflation, is here.  

The Fed, in the other hand, is still fighting deflation. Unemployment is still on the rise, and modest improvement in the housing market doesn't mean we're anywhere close to working off the massive inventory of unsold homes. 

Given the very low expectations for economic recovery, maybe 2% growth in 2010, how does the Fed hike interest rates and start sopping up liquidity? I believe inflation will have to become a concern before the Fed can act.  

*****In case you missed last night's special Internet Video Conference, called Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth, I have a replay ready for you. You can access it HERE.   

*****Reuter's reported yesterday that Rep. Barney Frank and another Democrat wrote a letter to the CEOs of Freddie Mac and Fannie Mae asking them to relax their standards for condo loans.  

Apparently Freddie Mac and Fannie Mae recently said they wouldn't give loans to potential condo buyers if the condo development was less than 70% occupied. Makes sense, these days. But Frank and his friend are worried the tighter standards will impair the housing market and constrict future developments. 

This is appalling. The only thing we need more than more condos is more Hummers.  
If the government truly thinks we can simply reflate our way back to prosperity, they are sadly mistaken. This recession is new animal, one where both consumers and corporations took on way too much debt. That debt now sits in the form of unsold homes, many of which have been foreclosed upon. 

These homes (and condos) must get sold. But they must get sold to people with the means to pay the loans. Simply lowering lending standards doesn't do it and may well prolong the pain of this recession. Isn't the lowering of lending standards much of what got us into this mess to begin with? 

*****China's still throwing its cash around, this time offering $7.2 billion for oil exploration company Addax Petroleum (LSE:AXC.L). It would be state-run Sinopec (NYSE:SNP) actually doing the deal. But after the attempt to buy a $19 billion stake in Rio Tinto (NYSE:RTP) it should be obvious that China is intent on securing the commodities it needs. 

And in a world starved for cash, don't be surprised when China gets what it wants.  

*****Last year, travel group AAA reported that car travel over the 4th of July was down 10.5%. This year, it will fall another 1.9%.  Airline travel is expected to be up nearly 5%.  

 

Stocks were up today in reversing the downward trend from the week with leadership from financials and healthcare. Most notably blue chips JPMorgan Chase & Co. (NYSE:JP), Goldman Sachs (NYSE:GS), Pfizer (NYSE:PFE), and Merck (NYSE:MRK) were up. Rounding out the leaders in financial were Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).

The Dow ended the day's trading session up 0.69% to close at 8,555 while the Nasdaq declined 0.02% and the S&P 500 saw gains, closing at 918, up 0.84%.

Small-cap bellwether Russell 2000 Index, representing the 2,000 largest small-cap stocks, closed up 0.36% to 509.

Leading small cap gainers reflected the broader push top leaders in financials including National Penn Bancshares (Nasdaq:NPBC) up 31.4%; American Capital (Nasdaq:ACAS) up 27.1%. Other gainers include Myriad Pharmaceuticals (Nasdaq:MYRXV) up 15.7%; Nelnet (NYSE:NNI) up 30.5%; and Talbots (NYSE:TLB) up 16%.

Small-cap decliners were lead by Liz Claiborne (NYSE:LIZ) down 25.9%, on forecasts of larger than expected losses. The company gave no indication for the larger losses other than the message from all apparel companies that consumers are cutting back on what they consider nonessential purchases. Liz Claiborne reported a loss of 37 cents per share in the first quarter, excluding one-time items. Analysts had forecast 33 cent loss per share for the second quarter. No guidance was provided by the company as to what the revised forecast might be. This played into investor concerns as sellers look to unload shares as reflected in higher than normal volume.

In other news concerning Liz Claiborne, the company announced yesterday that it intends to offer $75 million in convertible senior note due 2014. It is the company's intention to use the proceeds to pay down a portion of borrowings under an amended credit facility. 

*****10 banks have paid back $68 billion in TARP loans. Including some smaller banks that have already repaid loans, the total is now over $70 billion. Even though the repaid money was raised from secondary stock offerings, which dilute shareholder value, it's still something of a positive sign, I suppose.

Now, what's going to happen to the money? Will it sit in the TARP fund? Will it be used to back other loans to small businesses?

This is an inflation issue. The money supply has increased by around $1 trillion in the last year (much of the bailout "funds" have been loan and asset guarantees that haven't increased the money supply, yet). It's the Fed's job to contract the money supply to keep price inflation in check.

This is the problem with creating money - you have to be willing to "uncreate" it at some point. With unemployment as high as it is, inflation is not yet a concern. But that will change eventually, and the Fed will have to have the resolve to contract the money supply when the economy starts showing signs of life.

As we've seen in the past, an economy that gets hooked on liquidity is very hard to wean. I personally have my doubts as to whether this Fed will be able to avoid the Greenspan legacy of allowing asset bubbles to form. So we want to be ready to profit form whatever asset bubbles arise in the future.

This is one of the topics we'll be discussing in next Wednesday's Video Conference. It's titled Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth and will air on Wednesday, June 24 at 6:00 P.M. It's free to attend, you can sign up HERE

*****Stocks are trying to put an end to the sell-off that started with Monday's big decline. The S&P 500 is within a few points of its 200-day moving average. It's also less than 20 points from its 50-day moving average.

One of the simplest trend following systems focuses on the crossover of the 50-day and 200-day MA. When the 50-day MA crosses above the 200-day MA, it signals a trend change from bear to bull. When the 50-day MA falls below the 200-day MA, it signals a change from bull to bear.

So, the current trading is very significant to technical traders. The S&P 500 is flirting with a major buy signal. It should be noted that the Nasdaq flashed the moving average crossover buy signal a few days ago. I would view the moving average crossover on the S&P to be confirmation of the Nasdaq signal.

*****Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, isn't waiting. He's expecting a strong bounce and recommended 3 upside positions to his readers yesterday. One of them, the Direxion Technology Bull (NYSE:TYH), is a leveraged ETF that seeks triple the daily gains on the Russell 1000 Technology Index. That trade finished the day with a 3% gain.

Don't forget the new Daily Profit feature - Jason will give us another video chart analysis session tomorrow. In last Friday's edition he pretty much nailed this week's trading so I can't wait to see what he has to say about next week.
 
*****I'm itching to recommend a new stock to Daily Profit readers. We did pretty well with Graham Corp (AMEX:GHM) and Hovnanian (NYSE:HOV) earlier in this rally. 

I can't say I feel comfortable recommending Molecular Insight Pharmaceutical (Nasdaq:MIPI), but the story that came out yesterday is pretty darned interesting. The biotech announced that it can both detect and treat prostate cancer with its imaging agent, Trofex. And instead of the usual 5 tests including MRI and ultrasound, Molecular Insight can collect the necessary data for diagnosis within 2 hours of the Trofex injection.

The stock was up 42% to $6.24 yesterday. Of course, like most small biotechs, Molecular Insight is burning through cash like a teenager at the mall. But if this technology is viable, the stock will go a lot higher than $6.24.

Just thought you'd like to know…talk to you tomorrow.

 

 

Small-cap stocks eked out a modest advance Monday, enduring an up and down session in which better-than-expected economic data and enthusiasm about M&A activity dueled with bank worries and job loss jitters. In the end, the Russell 2000 (NYSE:IWM) closed up 5.70, or 1.28%, at 450.06. For the New Year, the Russell is now down 9.9%, while the Dow is off 7.5% and the S&P 500 is down 7.3%.

On the data front this morning, reports on existing home sales and leading indicators both beat the forecast for a rare upbeat showing out of economic data. The National Association of Realtors said that existing home sales rose 6.5% in December to an annual rate of 4.74 million units, well ahead of the projection of 4.40 million. As for leading indicators, the Conference Board said that an index of economic indicators rose 0.3% in December, which also was a much better showing than the forecast for a drop of 0.3%. It also marked the first rise in leading indicators since June.

The market will get more information on the housing sector via Thursday’s new home sales report, but the bulk of homes sold in America come via existing home sales, so today’s report was truly a ray of sunshine for a market that is teetering back on the verge of the bear market lows from November. The Russell is now down more than 13% from the January peak and last Friday generated the lowest weekly close since those bear market lows were carved out in November and the second-lowest weekly finish in more than five years. There is a large segment of market watchers who believe that the economic collapse started in the housing arena and the recovery won’t start until home prices stabilize and start to work higher. That camp got a rare positive signal today.

In addition to the economic data, a massive acquisition in the pharmaceutical arena was announced this morning before the open, with Pfizer Inc. (NYSE:PFE) — the world’s largest pharma firm — announcing plans to buy Wyeth (NYSE:WYE) for $68 billion, the largest deal in that sector for years. Pfizer shareholders didn’t care much for the news because the company will cut dividends to help pay for the purchase, and PFE shares retreated some 10%. From an overall market standpoint, . . .

Small-cap stocks remained higher into mid-session, bolstered by a big acquisition on the pharma front, which sparks hope that small caps are undervalued overall. If there are deals being done for large caps, then there should be attractive acquisitions for a bevy of smaller companies. In addition, a surprisingly strong showing on existing home sales also provided a lift to the market. Some of today's small-cap gainers were RXi Pharmaceuticals Corp. (Nasdaq:RXII), WellCare Health Plans Inc. (NYSE:WCG) and StealthGas (Nasdaq:GASS).

Other Market Watch highlights today included:

• Looking at sector activity today, metals and mining stocks were the strongest performing group in the S&P.  
• Energy prices and stock market direction have been trading hand-in-hand of late, so the rise in equities clearly supported crude oil.
• Energy stocks were on a roll today, up 2.9%, mirroring a 3% climb in cash crude oil prices.  
• Small caps remained higher, bolstered by a big acquisition on the pharma front, which sparks hope that small caps are undervalued overall.  

Small Cap Gainers:

• RXi Pharmaceuticals Corp. jumped 31% on news that the firm will enter a research collaboration with the University of Massachusetts Medical School. See (Nasdaq:RXII).  
• WellCare Health Plans Inc. rallied about 19% as the firm updated its 2008 forecast and said it would pay in fall outstanding term loan balances. See (NYSE:WCG).
• StealthGas climbs 15% in pre-market after announcing a rise in Q3 profit; declaring dividend. See (Nasdaq:GASS).
• Homebuilder stocks were going well today, with the ISE Homebuilders Index up 4.6%, with small-cap builder Lennar Corp. rising 11%. See (NYSE:LEN). 

Small Cap Losers:

• Wyeth withdraws from Crucell takeover talks; Crucell tumbles 15% in pre-market. See (Nasdaq:CRXL).
• AMN Healthcare Services Inc. was down 13% sinking to 52-week lows. See (NYSE:AHS).  

Small-cap stocks pushed higher after a flat open, underpinned by bullish enthusiasm stoked by news that Pfizer Inc. (NYSE:PFE) would pay $68 billion for Wyeth (NYSE:WYE) in one of the biggest pharma M&A deals in years. In addition, economic data on home sales and leading indicators topped expectations, fueling the rise in equities. Some of today's small-cap gainers were RXi Pharmaceuticals Corp. (Nasdaq:RXII), WellCare Health Plans Inc. (NYSE:WCG) and StealthGas (Nasdaq:GASS).
  
Other Market Watch highlights today included:

• Crude prices pushed about $1 a barrel higher, which should underpin energy shares if the firm tone persists.  
• Even though much of the early news today seemed soft (outside of the econ data), the market was holding together reasonably well.  
• Leading indicators came in at +0.3%, better than the projection for -0.3%. This marked the first rise in leading indicators since June 2008.
• Existing home sales came in at an annual rate of 4.74M units, above the forecast of 4.4M. Sales were up 6.5%, compared with a slide of 9.4% in Nov.

Small Cap Gainers:

• RXi Pharmaceuticals Corp. jumped 31% on news that the firm will enter a research collaboration with the University of Massachusetts Medical School. See (Nasdaq:RXII).  
• WellCare Health Plans Inc. rallied about 19% as the firm updated its 2008 forecast and said it would pay in fall outstanding term loan balances. See (NYSE:WCG).
• StealthGas climbs 15% in pre-market after announcing a rise in Q3 profit; declaring dividend. See (Nasdaq:GASS).
• AngioDynamics Inc. was up 12%, gapping higher and pushing toward multi-month highs. See (Nasdaq:ANGO).  

Small Cap Losers:

• Wyeth withdraws from Crucell takeover talks; Crucell tumbles 15% in pre-market. See (Nasdaq:CRXL).
• AMN Healthcare Services Inc. was down 13% sinking to 52-week lows. See (NYSE:AHS).  

Small-cap stocks pushed higher after a flat open, underpinned by bullish enthusiasm stoked by news that Pfizer Inc. (NYSE:PFE) would pay $68 billion for Wyeth (NYSE:PFE) in one of the biggest pharma M&A deals in years. In addition, economic data on home sales and leading indicators topped expectations, fueling the rise in equities. At 10:06 a.m. ET, the Russell 2000 (NYSE:IWM) was up 11.42, or 2.57%, at 455.78.

Existing home sales came in at an annual rate of 4.74 million units, well above the forecast of 4.40 million. Sales were up 6.5%, compared with a slide of 9.4% in November. Lower mortgage rates spurred refinance and purchase activity, and it will be interesting to see if housing data continues to surprise, or if today’s news was a “flier.” Meanwhile, leading indicators came in at plus 0.3%, also much better than the projection for a slide of 0.3%. This marked the first rise in leading indicators since June 2008.

The news was Dow-30-heavy this morning, with five of 30 Dow stocks making big news. In addition to the Pfizer takeover, arguably the biggest wave came from Caterpillar Inc. (NYSE:CAT) as the maker of heavy equipment said that 2009 profits would shrink relative to 2008 and that the firm would slash some 20,000 jobs. Meanwhile, McDonald’s Corp. (NYSE:MCD) topped the profit forecast. Interestingly, even though the market was eager to embrace the Pfizer news, the potential breakup of the Dow Chemical/Rohm & Haas merger didn’t seem to phase investors.

Even though much of the early news today seemed soft (outside of the econ data), the market was holding together reasonably well. There was some thought that stocks were a little oversold following last week’s slide to the lowest weekly close since the November bear market lows were forged.

Looking at the chart picture, the market remains in a sideways consolidation range and bounce several times last week off dips toward 431 to 435. For today, important support will be at 435, then at 431; a breach of the latter could open . . .

U.S. stocks are expected to open flat to lower, with the Dow pulled down by a profit warning from Caterpillar Inc. (NYSE:CAT), as the heavy equipment maker said profits in 2009 will fall far shy of 2008 and the firm said it will slash 20,000 workers. Also, Dow component Pfizer Inc. (NYSE:PFE) will acquire Wyeth for $68 billion, which will likely weigh on the drug maker. The Dow is expected to open about 50 points lower, while the Russell 2000 (NYSE:IWM) is seen flat, near 444.35.

Crude oil prices slipped about $0.50 a barrel ahead of the opening, which could weigh on energy and various commodity stocks if that weak tone prevails. Energy prices have been choppy and volatile around the stock market opening in recent days, so there is a risk that things could turn quickly. The U.S. dollar was flat against the euro and Treasury products were mildly lower, neither of which should be a big early factor for equities.

The market will have to navigate the first batch of data on the housing market this morning, with existing home sales coming out at 10:00 a.m. ET. Existing home sales account for the lion’s share of homes sold in America. As the week progresses, the market will also see data on new home sales on Thursday. In addition, leading indicators numbers also come out at 10:00 a.m., and the combination of existing home sales . . .

Small-cap stocks pulled higher this morning and remained in positive ground after a mixed batch of economic reports buffeted the market. A firm tone in energy stocks, momentum from overseas gains and optimism about upcoming stimulus plans provided a lift. At 10:04 a.m. ET, the Russell 2000 (NYSE:IWM) was up 8.51, or 1.68% at 513.54.

The ISM Non-Manufacturing Survey came in at 40.6, which was better than the forecast of 37.0 and a nice bounce off record lows from the previous reading. Still, this number is low historically and consistent with recession. Although the ISM reading was positive relative to expectations, the same can’t be said for factory orders, which tumbled 4.6%, much worse than the projection for a decline of 2.5%. Completing the early data trifecta, pending home sales were also sour, sinking 4.0% versus the consensus for a decline of 1.0%. Now that this rush of economic data is out of the way, the market should be free to focus on other factors before this afternoon’s 2:00 p.m. ET release of FOMC minutes.

Crude oil prices pulled back above $50 dollars a barrel for the first time in some ...

Small-cap stocks were slightly lower early this morning, pulled down by a rash of weak profit reports and gloomy outlooks amid ongoing concerns about the economic environment. Energy stocks were a soft spot for the market as crude oil tumbled to fresh four-year lows. At 10:05 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.24, or 0.20%, at 485.35.

The Philly Fed report came in at 39.3, which was up from last month’s reading, but still slightly below the consensus forecast. The leading indicators report was down 0.4%, which was in line with projections.

Earlier this morning ahead of the opening, the weekly claims report came in at 554,000, which was in line with market projections, but still awful historically. The four-week moving average on claims rose to 543,750, which is the highest level since December 1982. Continuing claims edged down 4.384 million, down from 4.431, which is a mildly positive development – but again, these numbers are still among the highest in a generation and the overall employment picture in the United States is expected to get worse over the next couple of months.

Bullish traders will say that all the dreadful economic news is a known factor and is already priced into the market. What’s more, most of the profit news has been awful as well, but is also subject to the “been there, done that” market response. This morning, analysts at UBS lowered their forecast for 2009 profit estimates for the . . .

Small-cap stocks closed lower, pulled down by slumping commodity markets, a cautious tone amid peak earnings season and lagging performance in the tech sector. The Russell 2000 (NYSE:IWM) closed down 16.18, or 2.96%, at 530.65 and is now down 31% for the year. For the first time in many months, the Dow has actually pulled virtually even with the Russell for 2008, while the S&P 500 is off 35%. Just a few weeks ago, the annual performance spread between the Russell and Dow was in double digits on a percentage basis, so the recent collapse in the spread between small- and large-caps reflects an even more aggressive flight out of “riskier” small-cap fare from investors.

If Monday’s big rally was primarily about energy, then today’s slide had a few more tentacles in play, but the main theme in motion was about the economy and whether or not global slowing would continue to get in the way of the stock market.

From a global standpoint, a recession in the United States and a sharp downturn around the world will hurt demand for commodity goods, a theme that played out today … not just in the U.S. market, but around the globe. Perhaps the perfect poster child for that theme today was the copper market, which crumbled to the lowest point since December 2005 and is now off 50% from the spring highs. A big part of that pullback is linked to China, where GDP slipped below double digits this week for the first time in five years. And the whole bearish commodities story surely got an extra kick from a big rally in the U.S. dollar, which makes commodities priced in dollar terms more expensive — and therefore crimps demand for those products. The greenback soared more than 200 basis points, or some 2% against the euro, making not just new highs for the move but also charging to the highest point since February 2007. With the dollar on a rampage and commodities limping on demand fears, crude oil’s rally from Monday was short-lived. Crude oil futures plunged some 4% and quickly . . .

Small-cap stocks gave back a sizable chunk of Monday’s big rally early on today, pressured by concerns that corporate profits are already sloppy and will be further strained by a weak economy going forward. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.46, or 1.55%, at 538.37.

With no economic reports on tap today, the market will focus on the wave of quarterly earnings coming in. Although the earnings news has been mixed so far, investors clearly are concerned that even the upside surprises were already tainted by very low projections or will be pinched to perform into what appears to be a difficult 2009.

The lift small caps enjoyed Monday from the energy sector appeared on the wane today, with crude oil prices slipping on concerns about demand. Also, commodities in general were likely to be on the defensive as the U.S. dollar was soaring against the euro, climbing 1.25%, which makes commodities priced in dollar terms more expensive (and less attractive to foreign buyers).

Around the world overnight, stocks were mixed, with Japan up 3.3%, Hong Kong down 1.8%, China off 0.8%, Taiwan up 0.2%, Australia up 3.8%, Singapore down 0.9%, South Korea down 1% and India up 4.5%. Europe was in positive territory on news that France would pour some 10.5 billion euros into the banking arena, but the early slide in the U.S. market pulled down Europe.

Back to the earnings story, the one that really seemed to sum up the market sentiment this morning was Texas Instruments Inc. (NYSE:TXN). TXN shares were off 9% shortly after the open as the company projected earnings for the upcoming quarter well below the forecast, which reflects the difficult operating environment for tech companies amid a slumping economy. Also in the tech arena, . . .

Small-cap stocks are expected to open lower, pulled down by a cautious tone amid a sea of earnings releases. Losses should be limited by another dip in Libor rates overnight, which hints at a thaw in frozen lending lines. Stock index futures were down about 1.3% overnight, which suggests an opening for the Russell 2000 (NYSE:IWM) near 540.

Earnings news was all over the board this morning, but investors are concerned that the coming quarters will continue to pinch profits as the economy limps into 2009 and consumers tighten spending.

Analysts at Goldman Sachs downgraded Citigroup Inc. (NYSE:C) to a “sell” rating, which could be a burden to bank and financial stocks this morning. C shares were off about 3% in pre-market trading. Within financials, there were positive stories this morning, including American Express Company (NYSE:AXP), which was up almost 4% after beating the estimate.

Amid the flood of earnings from last night to this morning, it appears the earnings news that has really stuck to the investor psyche came from Texas Instruments Inc. (NYSE:TXN) which warned that fourth-quarter results would miss the forecast. TXN shares were down about 8% in pre-market trading. Also, on the tech front, Sun Microsystems Inc. (Nasdaq:JAVA) was off about 9% in pre-market trading . . .

Small-cap stocks turned higher shortly after the opening, underpinned by a decline in crude oil prices, which helped offset some overnight concerns about the closure of a large hedge fund. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.66, or 0.50%, at 742.16.

The factory orders report came in at 1.3%, which was above the forecast of 1%. The data was for the July time frame, so it’s a little dated. Stocks edged higher after the report, but this particular report tends to have a muted impact on trading direction for stocks or currencies.

Earlier this morning, the weekly MBA Mortgage Applications Index climbed 7.5%, the refinance index was up 2.1% and the purchase index rose 10.5%, which hints at a modest upside pop in mortgage activity as the fixed rate dipped about 0.05% to 6.39%.

In other economic activity news, MasterCard Advisors said that shoppers reduced spending on clothes and shoes over what should have been a big back-to-school season in August, instead spending money on food and gasoline.

Ospraie Management LLC, announced plans to close its biggest hedge fund, with holdings estimated at some $2.8 billion dollars. The fund was thought to have significant exposure to equities with commodity themes and has been losing money at an alarming clip in recent months. Ospraie will still hold other hedge funds with large investments, but the fund in question has ties to Lehman Brothers Holdings Inc. (NYSE:LEH) as the investment bank has an estimated 20% stake in the fund. There are concerns that this news won’t help Lehman’s effort to raise capital or find a buyer and overshadowed news reports overseas that HSBC, another Chinese bank and several hedge funds were interested in taking a stake in the beleaguered . . .

Biopharmaceutical company Medivation, Inc. (Nasdaq:MDVN) said this morning that it will collaborate with drug juggernaut Pfizer Inc. (NYSE: PFE) to develop and commercialize Dimebon, Medivation’s investigational drug for treatment of Alzheimer’s disease and Huntington’s disease. Dimebon is currently being evaluated internationally in a confirmatory Phase III trial in patients with mild-to-moderate Alzheimer’s disease. 

Shares leaped 29%, or $7.47, to $33.50 in pre-market trading on heightened volume. For detailed price information and news stories on Medivation, click MDVN.

Small-cap stocks spent most of the day in the green, but closed well off the intraday highs as a slide in crude oil prices was countered by mixed returns on the earnings front. The Russell 2000 (NYSE:IWM) edged up 2.36, or 0.33%, to 719.19, the highest close in four weeks.

The market also may have been ripe for a little bit of a consolidation “breather” session today as the Russell has rallied 12% off the July 15 lows in just seven sessions. Short-term intraday momentum readings were overdone coming into today’s action, which could easily have sparked some long profit-taking from traders who caught the recent bounce. Also, it’s a little easier to find the silver lining in the news when the market is oversold.

In recent days, the dominant upside theme has been the financial story. Big-name banks have had a string of upside earnings surprises, and that momentum easily spilled over into the small- and mid-cap financial names as well. While GSEs were a strong performer today, the overall financial landscape was a little more cautious, with the Financial Select Sector SPDR hovering near breakeven levels late in the session.

Large-cap stocks that dominated the picture today included McDonald’s (NYSE:MCD), Pfizer (NYSE:PFE), Boeing (NYSE:BA), AT&T (NYSE:T) and Washington Mutual (NYSE:WM). Those stocks reflected the mixed signals investors had to navigate when trying to read through earnings results to get a feel for consumer spending, economic turmoil and macro trends. Washington Mutual was clobbered 19%, which took some of the wind out of the financial sails, but was countered by optimism on the GSE horizon, as hope for a quick passage of the Treasury rescue plan lifted both Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). As for the aforementioned names, MCD was down about 0.9% after reporting earnings, PFE was up over 3%, BA was down nearly 4% and T . . .

After falling off slightly after the opening, small-cap stocks staged a swift rally but then deflated somewhat as oil continued to pull back for a second straight trading session amid mixed corporate earnings reports and as President Bush and the House came to an agreement on a housing bail-out plan.

At 12:30 p.m. ET, the Russell 2000 (NYSE:IWM) was up 0.68, or 0.09%, at 717.50 amidst a broad market rally. The Dow was up 4.39, or 0.04%, to 11,606.89, while the tech heavy Nasdaq gained 9.1, or 0.39%, to 2,313.06 as investors welcomed the deflation in oil prices, which may ease pressure on the consumer and businesses.

Crude oil prices slipped roughly $0.60 dollars a barrel to $127 midday, marking the second consecutive day the commodity has lost its mojo. Today, an increase in U.S. gasoline stockpiles added to the downward pressure on crude. The energy market has been sinking this week as Hurricane Dolly veers away from key production areas in the Gulf of Mexico and on worries about demand for high-priced crude oil amid sluggish economic conditions in the United States and new usage curbs in China.

As crude oil prices have slipped in recent sessions, the U.S. dollar is turning green again, rising against the euro and the yen in mid-day action. The assent in oil, has contributed to the dollars demise this past year, so naturally that correlation has reversed itself today. A stronger dollar often has a bearish impact on global commodity values since so many products are priced in dollars. Also on the commodities front, grains markets are expected to trade sharply lower today amid improving Midwest weather and the firm dollar tone.

President Bush dropped his veto against the House’s housing package that bails out struggling homeowners by offering $3.9 billion for areas containing the most foreclosures. The House is expected to vote on the bill as early as today. Additionally, lawmakers came to a mutual agreement that permits Treasury Secretary . . .

Small-cap stocks hovered near steady levels in early trade, pulled down modestly at times by sporadic profit-taking from short-term traders who caught the rally Tuesday and by a mixed tone on the earnings front. However, selling was limited by an extension in the crude oil pullback and by gains in overseas stock markets. At 9:50 a.m. ET, the Russell 2000 (NYSE:IWM) was up 1.24, or 0.17%, at 718.06.

Crude oil prices were down about $1 dollar a barrel shortly after the open, supportive to stocks, but the bounce above overnight lows took some of the upside steam away from equities. The energy market has been sinking this week as Hurricane Dolly veers away from key production areas in the Gulf of Mexico and on worries about demand for high-priced crude oil amid sluggish economic conditions in the United States and new usage curbs in China.

The decline in energy prices overnight was a boon to equity markets around the world, with Hong Kong shares up 2.7%, Taiwan up 3.5%, Japan up 1%, Australia up 2%, Singapore up 3%, South Korea up 1.9% and India up 5.9%.

In conjunction with the pullback in crude oil prices, the U.S. dollar has caught a bid the last couple of days. The greenback was up about 0.3% against the euro this morning and about 0.4% versus the yen. A stronger dollar often has a bearish impact on global commodity values since so many products are priced in dollars. Also on the commodities front, grains markets are expected to trade sharply lower today amid improving Midwest weather and the firm dollar tone.

The early glimpse of “big-name” corporate earnings was a mixed bag this morning, with fast-food giant McDonald’s Corp. (NYSE:MCD) topping the forecast and rising 1% overnight, but slipping into the red shortly after the open. Also, Pfizer Inc. (NYSE:PFE), the maker of Viagra, reported solid results and rose 2.8%. Conversely, Washington Mutual (NYSE:WM) reported sloppy earnings and was down 1.2%, while Costco (Nasdaq:COST) warned they would miss the Street’s forecast . . .

Small-cap stocks are expected to open higher, lifted by an extension in the crude oil pullback, solid action in the U.S. dollar and a decent tone on the earnings front. The Russell 2000 (NYSE:IWM) was up about 0.3% in after-hours trading, which suggests an open near 719.

Crude oil prices continued to slide after Tuesday’s big decline, and were down about $2 dollars a barrel heading toward the U.S. stock market open, with benchmark crude prices around $126.50. The decline in energy levels was tied to ideas that Hurricane Dolly would not threaten a large portion of production in the Gulf of Mexico.

The downdraft in energy prices this week has been accompanied by a resurgent U.S. dollar, which was up about 0.2% against the euro and 0.4% versus the yen just in front of the stock market open.

On the earnings front, McDonald’s Corp. (NYSE:MCD) topped the forecast, was up about 2% in after-hours trading and should provide a lift to large-cap index products. Pfizer Inc. (NYSE:PFE) was up about 3% after solid results, but Washington Mutual (NYSE:WM) was off about 3% before the opening bell after sloppy quarterly results. Also, wholesaler Costco Wholesale Corp. (Nasdaq:COST) was down . . .

Small-cap shares opened flat and then edged higher, underpinned by news of a big-cap energy acquisition, a firm tone in the dollar, and ideas that Wednesday’s post-FOMC minutes slide was overdone. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was up 2.46, or 0.34%, at 729.56.

News that NRG Energy (NYSE:NRG) tendered a bid to buy Calpine Corp. (NYSE:CPN) for a stock deal worth $11 billion injected some enthusiasm back into the M&A picture this morning, and played a supportive role in market psychology. Calpine shares were up 7.1% shortly after the opening on the news. If there are large-cap merger deals to be done, then there are certainly bargains to be had within small caps.

There are several apparel retailers coming out with earnings today, which could ripple through the markets. Children’s Place Retail Stores (Nasdaq:PLCE), which is right on the upper end of small-cap market capitalization, reported solid quarterly results this morning and the stock was up 6.2% right after the open.

Large caps in the news early today include Pfizer Inc. (NYSE:PFE), which tumbled 1% on the opening on news that its anti-smoking drug had serious side effects. Also, NetApp Inc. (Nasdaq:NTAP) tumbled 5.7% as the company’s forward projections disappointed.

Crude oil prices shot above $135 dollars a barrel overnight, and continue to be a drag on the both the consumer pocketbook and the cost structure for corporations (just ask the battered airline industry). Goldman Sachs technical analyst Kevin Edgeley said in a research report overnight that crude oil momentum and trend strength are pointing higher, and that there is a long-term channel extension target for crude at $142.90. If crude oil were to close lower today, and well off that $135 record overnight peak, it could generate a topping reversal on charts, and is worth . . .

Small caps were expected to open near steady levels this morning, with caution from another jump in crude oil offset by enthusiasm about a new large-cap acquisition. In overnight trading, the Russell 2000 (NYSE:IWM) was basically flat, while S&P 500 futures were just modestly above fair value.

The weekly unemployment claims report came in a little better than the forecast at 365,000 versus the expectation for 375,000. Equity futures were little changed immediately after the data.

Stock market activity overnight was flat to lower, with European shares hovering near steady levels, while Asia stocks were primarily lower. Hong Kong was off 1.6%, China down 1.9%, Singapore down 1.1% and Bombay lower by 1.9%.

There was news of a large-cap acquisition overnight between NRG Energy (NYSE:NRG) and Calpine Corp. (NYSE:CPN), in an $11 billion stock deal that could energize the bullish argument somewhat today.

Other big caps in the news this morning included Pfizer Inc. (NYSE:PFE), which was off about 1.5% on news that their anti-smoking drug had side effect issues. Also, NetApp Inc. (Nasdaq:NTAP) was down a whopping 14% as the firm’s projected earnings and revenues were below analyst expectations. PetSmart Inc. (Nasdaq:PETM) shares were off more than 5% overnight on lower-than-expected forward guidance.

Crude oil spiked higher yet again overnight, this time topping $135 dollars . . .

Small-cap stocks opened lower and traded in a fairly narrow range during the rest of today’s session, trimming losses off the lows, but never catching up with a tame rise in the Dow and S&P 500. In the end, the Russell 2000 (NYSE:IWM) tumbled 5.39, or 0.76%, to 708.00, but an inside session dip for the small-cap index in the shadow of Wednesday’s big rise wasn’t all that unsettling.

However, if it all feels like a familiar refrain, you’re right. The Russell 2000 has now had five 3% one-day gains so far this year, and has now closed lower four times and was flat in the other instance. In essence, the market has been unable to sustain momentum off big rally days as investors are unwilling to take a stand that the worst is over for stocks. When the stock market starts to fly, investors are more willing to buy into strength and fund managers will scramble to catch up with the market. For now, the inability to sustain rallies suggests that the market is still burdened by caution. In the long haul, creating a “wall of worry” isn’t necessarily a bad thing when stocks are trying a build a foundation low, but it can create volatility, uncertainty and rollercoaster-price moves along the way.

Economic news today was less embraced by investors than what we saw during Wednesday’s big upside push. The most dynamic report came from the Philadelphia Federal Reserve, as their survey on manufacturing activity in the area came in down 24.9%, well below the market forecast which was in the minus 15 to . . .

The Russell 2000 (NYSE:IWM) is deep into negative territory as investors parse through the latest earnings and economic news. At 1:21 p.m. ET, the small-cap index had let go 7.18 points, or 1.01%, to 706.21. The Dow Jones Industrial Average was down 17.26 points, or 0.14%, to 12,602.01.

Small-cap stocks fell out of the gate and have been moving lower as major corporations announced disappointing quarterly earnings.

Merrill Lynch & Co., Inc. (NYSE:MER) is partially to blame for the bearish mood on news before the opening that it swung to a steep first-quarter net loss and will have to cut jobs due to more writedowns associated with the subprime mortgage mess.

Shares of Pfizer Inc. (NYSE:PFE) are also falling on news before the start of trading that first-quarter profit declined 18%.

Meanwhile, shares of small-cap Spectrum Pharmaceuticals, Inc. (Nasdaq:SPPI) are posting a healthy gain on news that one of its drugs has . . .

The Russell 2000 (NYSE:IWM) stumbled on the opening, unable to extend the big rally from Wednesday’s action. At 10:05 a.m. ET, the Russell was down 7.60, or 1.06%, at 705.79 as a profit-taking mentality from those who caught the rise Wednesday dominated early action.

As the market progresses today, it will be important for the Russell to find support above the old swingline at 700. If the selling pressure begins to intensify, 695 is the next support zone to watch. Any move back into the green would be an important show of resilience as the market has been unable to sustain upside momentum after 3% rally days so far this year.

The market remained under pressure after the Philly Fed survey, which came out at 10:00 a.m. ET, was down 24.9%, quite a bit worse than the market forecast of a 15% loss. The sobering Philly Fed numbers overshadowed the Leading Indicators report, which rose 0.1%, in line with expectations.

Ahead of this morning’s opening, the Weekly Claims report was relatively close to the forecast, and quickly fell off traders’ radar screens, especially ahead of the Philly Fed and Leading Indicator reports.

With crude oil tipping the scales at fresh record highs this morning near $115 dollars a barrel and gasoline pump prices climbing before we’ve even reached . . .

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:


• AVANT Immunotherapeutics, Inc. (Nasdaq:AVAN), up 32% on news it has licensed one of its vaccines to Pfizer Inc. (NYSE:PFE).
• Fuqi International, Inc. (Nasdaq:FUQI), up 20%.
• Avocent Corp. (Nasdaq:AVCT), up 16%


• Epicor Software Corp. (Nasdaq:EPIC), down 14% on news it has lowered its full-year earnings and revenue outlook.
• ViroPharma Inc. (Nasdaq:VPHM), down 6% on news it has stopped developing a hepatitis C drug.
• AMCORE Financial, Inc. (Nasdaq:AMFI), down 5% on news of a first-quarter loss.

Small-cap futures are expected to open lower this morning, with overnight futures trading down about 0.50%. Overseas markets were higher in Asia Wednesday night in line with Wednesday’s gains in U.S. equities, but the move was not as impressive (Europe equities were mixed), which might have sparked profit-taking from short-term traders.

Futures markets wafted through the Weekly Claims report this morning with little change, as the number was close enough to the market consensus to have very little impact on the morning action.

There is further event risk this morning from the Philly Fed survey and Leading Indicators, which both hit the wires at 10:00 a.m. ET. The Philly Fed report is expected to sport five consecutive contraction readings for the first time since the 2001 recession. The Leading Indicators report is a compilation of mostly-known . . .

Shares of Nektar Therapeutics (Nasdaq:NKTR) are falling on news before the opening that its inhaled insulin product appears to increase the risk of cancer. The San Carlos, Calif.-based company reported that clinical trials conducted by Pfizer Inc. (NYSE:PFE) showed an increase in the number of new cases of lung cancer observed in inhaled insulin patients when compared with a control group.

“The concern over this new data analysis from ongoing clinical trials has resulted in the termination of all negotiations with potential partners,” said CEO Howard Robin in a statement.

At 10:50 a.m. ET, the stock had declined $1.66, or 23%, to $5.53.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices have extended their earlier losses. At 1:43 p.m. ET, the small-cap index had retreated 9.30 points, or 1.38%, to 662.27. The Dow Jones Industrial Average (INDU) had declined 195.18 points, or 1.63%, to 11,776.01.

Stocks small and large have moved deeper into negative territory as investors once again get the economic jitters.

Leading the way down are capital goods, followed by basic materials such as iron and steel. The tech sector, which has been getting the lion’s share of attention today, is also aching.

That’s because Apple Inc. (Nasdaq: AAPL) announced before the opening that it expects slower sales growth for the second quarter, while Motorola Inc. (NYSE: MOT) indicated that it will swing to a loss in the current quarter due to a decline in sales of its mobile devices.

Largely disregarded was news from drug maker Pfizer Inc. (NYSE: PFE). The New York-based company reported before the start of trading that its fourth-quarter profit was $3.6 billion, or $0.52 per share, above Wall Street’s forecasted earnings of $0.47 per share. Chairman and CEO Jeff Kindler attributed the result to cost reductions and the weak dollar.

But overall, pharmaceutical shares are sagging thus far in the session. Retailers are among the few gainers, followed by the transportation sector, represented by trucking and railroad companies.

Elsewhere, the declining stock market and fears of a U.S. recession have combined to lower the price of oil $2.11 to $87.10 a barrel.

The Russell 2000 (NYSE: IWM) fell for the third consecutive time today following news of a decline in industrial production and renewed fears of a credit squeeze. The Russell 2000 lost 2.10 points, or 0.27%, to 769.50. The Dow Jones Industrial Average (INDU) added 66.74 points, or 0.51%, to 13,176.79.

On a year-to-date basis, the Russell 2000 has retreated 2.28%, while the Dow has risen 5.63% and the S&P 500 has added 2.97%.

Industrial production unexpectedly fell 0.5% in October, the U.S. Federal Reserve reported before the opening. That’s the biggest decline since January, defying economists’ projections of a rise of 0.1%. Industrial production added 0.2% in September.

The decline was due primarily to a 1.6% drop in utilities, as well as smaller declines in mines, construction and consumer goods. Compared with October 2006, industrial production has increased 1.8%.

Capacity utilization for the total industry declined to 81.7% from 82.2% in September.

The data tell us that the U.S. economy is probably headed for a slowdown, as industrial production is about 20% of gross domestic product. On the plus side, factories have room to ramp up production without triggering inflation.

Biopharmaceutical company, Coley Pharmaceutical Group, Inc. (Nasdaq: COLY), reported this morning that it is being acquired by Pfizer Inc (NYSE: PFE) for $8 per share, representing an enterprise value of $164 million.

Shares of Coley Pharmaceutical rocketed 159.67%, or $4.79, to $7.79 out of the gate. Shares of Coley Pharmaceutical have been trading in the range of $2.81 to $13.50 for the past 52 weeks.

After a spate of food, drug and product safety recalls from China has left the nation's reputation in tatters among trading partners, one might think all the negative publicity would have shaken confidence in the country's pharma industry. It hasn't.

To allay Western concerns, Beijing, which wants a healthy pharmaceutical industry, has pledged $1.2 billion to clean up its food and drug safety problems. China's State Food and Drug Administration, which has a regulatory system similar to the U.S. Food and Drug Administration, is being reformed to improve safety standards and crack down on corrupt practices and drug counterfeiters (the Chinese media has reported the agency has yanked hundreds of manufacturing licenses and stepped up facility inspections).

Lower costs, top scientific talent and access to one of the world's largest and fastest-growing markets for prescription drugs have led every Big Pharma company—including Pfizer Inc. (NYSE: PFE), GlaxoSmithKline (NYSE: GSK), Bristol-Myers Squibb Co. (NYSE: BMY), Sanofi-Aventis (NYSE: SNY), Britain's AstraZeneca (NYSE: AZN) and Switzerland's Novartis (NYSE: NVS)—to set up shop in China.

But international heavyweights aren't the only ones vying to tap China's rich drug market. In one niche in the bio-drug sector, a local player dominates rivals. 3SBio Inc. (Nasdaq: SSRX), a leading producer of high-quality, low-cost biopharmaceuticals, has cornered the market in China for the biologic drug Epoetin, known as Epo, which is used to treat anemia associated with chemotherapy and kidney dialysis by increasing production of red blood cells.

Similar to Amgen Inc.'s (Nasdaq: AMGN) wildly popular Eopgen, 3SBio's flagship Epo product, sold under the brand name Epiao, makes up 37% of the Chinese market in product sales. (Amgen's product, distributed in China under the name Espo, has 15% market share; Swiss pharmaceutical company Roche's Epo drug, Recormon, has 10%.) Epogen sales, which are growing 30% annually, account for about 70% of 3SBio's total revenue.

Tpiao, 3SBio's second best-selling product, is used to treat platelet deficiency, a side effect of chemotherapy treatment. Since its January 2006 launch, the drug has sold unchallenged with no known competition in China. Analyst Kimberly Lee of Pacific Growth Equities estimates the drug will rake in $4.8 million in fiscal 2007 and could see sales grow in the neighborhood of $29 million in five years.

Small-cap stocks jumped nearly 3% today, propelled by surprise earnings from Wal-Mart and an easing of credit fears. The Russell 2000 (NYSE: IWM) added 22.06 points, or 2.88%, to 789.15, snapping a two-day losing streak. The Dow Jones Industrial Average (INDU) gained 319.54 points, or 2.46%, to 13,307.09, its first rise in four sessions.

On a year-to-date basis, the Russell 2000 has advanced 0.22%, while the Dow has risen 6.67% and the S&P 500 has added 4.55%.

Trading got off to a bullish start this morning on news that Wal-Mart Stores Inc. (NYSE: WMT) saw a 7.9% increase in third-quarter profit at its U.S. stores, while revenue rose 8.9%.

The result pleasantly surprised analysts and eased fears that the U.S. consumer was cutting back on spending. Americans do about 10% of their shopping at the Bentonville, Ark.-based retailer, which began offering discounts two weeks earlier than last year to lure customers.

Stocks were gaining momentum, with the Russell 2000 adding more than 1% within the first 30 minutes of trading.

The bears had no chance, even after Bank of America Corp. (NYSE: BAC) said that it projects a fourth-quarter pre-tax charge of $3 billion due to its purchase of collateralized debt obligations that have plummeted in value because of the stagnating U.S. housing market. Collateralized debt obligations are loans—such as mortgages—that are pooled together and sold to institutional investors as a package.

Javelin Pharmaceuticals (AMEX: JAV) is all about controlling pain. The company now has three products it is planning to introduce in upcoming quarters, and approvals would not only ease patient suffering but give investors relief as well.
 
Based in Cambridge, Mass., Javelin is an emerging specialty pharmaceutical company that searches out unmet and underserved needs in pain management. Incorporated in 2005, Javelin’s three product candidates are designed to better relieve pain with fewer adverse side effects and faster results than other treatments. The company has successfully retained intellectual property rights on these products, extending the term of commercial exclusivity.

Rylomine, or intranasal morphine, is one product in Javelin’s pipeline. It is in Phase III development in the United States for acute moderate-to-severe pain and in Phase II studies in Europe. Rylomine works faster than oral morphine and does not require professional medical assistance, as injected morphine usually does. A second product is PM-150, or intranasal ketamine. A formulation of ketamine, a non-opiate, the product is in Phase III trials in both the United States and Europe.

It’s the third offering—Dyloject—that’s of the moment. Dyloject is a formula for injectable diclofenac and is in a Phase III trial in the United States and awaiting approval in the U.K. Diclofenac, an NSAID, is widely prescribed for post-operative pain. Dyloject is in development in the United States for post-surgical pain; in the U.K., it additionally targets acute pain.

The wait for regulatory approval of the U.K. plant for Dyloject has put investors on edge. Originally hoped for by the end of summer, it is still expected soon: in late September at the UBS Global Life Sciences Conference, Fred Mermelstein, founder and president, said the company expects approval in the near term and plans for a U.K. commercial launch in the fourth quarter. Javelin has been hiring sales people for the rollout, which is expected to extend into the EU in 2008.

Just this month, Patricia Bank, analyst at Pacific Growth Equities, said in a research note that she fully expects the Dyloject manufacturing plant to be approved. “However, after speaking with industry consultants, we are resigned to the possibility that the agency may request additional minor corrective actions,” she said, adding that this would be routine practice.

The Russell 2000 (NYSE: IWM), along with the other major U.S. indices, is treading lower this morning after disappointing earnings from Bank of America Corp. (NYSE: BAC) refreshed investors’ concerns that the subprime mortgage debacle is materially cutting into corporate earnings and the economy.

At 10:37 a.m. ET, the small-cap index had shed 1.33 points, or 0.16%, to 823.56. The Dow Jones Industrial Average (INDU) was down 25.61 points, or 0.18%, to 13,866.93.

Bank of America’s third-quarter net income plunged 32% on account of write-downs on leveraged buyout loans and higher credit loss provisions. The firm’s third-quarter profit was $3.7 billion, or $0.82 per share, below analyst expectations of $1.06 per share and from $5.4 billion, or $1.18 per share, during the same period of 2006.

Adding to bearish earnings news, Pfizer Inc.’s (NYSE: PFE) third-quarter net income plummeted 77%, due to a $2.8 billion charge related to the company exiting its insulin product, Exubera. The company made the decision to exit Exubera because of intense competition from generic competitors. Pfizer’s third-quarter net income totaled $0.76 billion, or $0.11 per share, below Wall Street projections of $0.52 per share and from $3.36 billion, or $0.46 per share, a year earlier.

Earnings from Bank of America and Pfizer overshadowed Nokia Corp.’s (NYSE: NOK) strong third-quarter results. The mobile device maker reported an 85% increase in third-quarter profit, on a 26% increase in the number of phones shipped in the quarter.

As stocks sold off, treasuries rose for the fourth straight trading session for the first time since August, as the effects of the credit crisis reared its ugly head on reducing earnings at some of the largest U.S. banks. The yield on the two-year note fell to 3.92% at 10:06 a.m.

The odds for a quarter-percentage point Fed rate cut at the Oct. 31 meeting rose to 68% odds from a 54% chance Wednesday. The increased odds of a Fed rate cut sent the dollar tumbling to a record low against the euro. The dollar fell to $1.42 against the euro at 11 a.m. ET.

The Russell 2000 (NYSE: IWM) futures are pointing lower and the small-cap index will be weighed down by feeble earnings from Pfizer (NYSE: PFE) and Bank of America (NYSE: BAC).

Bank of America Corp.’s third-quarter net income plunged 32% due to write-downs on leveraged buyout loans and higher credit loss provisions. The firm’s third-quarter profit was $3.7 billion, or $0.82 per share, below analyst expectations of $1.06 per share and from $5.4 billion, or $1.18 per share, during the same period of 2006.

In other bearish news, Pfizer Inc.’s third-quarter net income plummeted 77%, due to a $2.8 billion charge related to the company exiting its insulin product Exubera. The company made the decision to exit Exubera because of intense competition from generic competitors. Pfizer’s third-quarter net income totaled $0.76 billion, or $0.11 per share, below Wall Street projections of $0.52 per share and from $3.36 billion, or $0.46 per share, a year earlier.

At 8:30 a.m., the U.S. Department of Labor said the number of Americans filing first-time applications for state unemployment benefits increased beyond economists’ expectations. For the week ended Oct. 13, the number of initial jobless claims rose to 337,000, above a forecast 315,000 and compared with 309,000 during the prior week.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap below $750 million:

Biggest percentage gainers:

• WSI Industries, Inc. (WSCI), up 23.8%.
• Fonar Corp. (FONR), up 19%.
• HSW International Inc. (HSWI), up 19%.

Biggest percentage losers:

• LK International Inc. (JADE), down 20.5%.
• Nektar Therapeutics (NKTR), down 18.3%.
• Syneron Medical Ltd. (ELOS), down 15%.

Shares of Icagen, Inc. (Nasdaq: ICGN) are soaring in pre-market trading this morning following news that the biopharmaceutical company has entered into a definitive purchase agreement with Pfizer (NYSE: PFE) for the private placement of up to $15 million of Icagen common stock.

Icagen said it will sell 2,688,172 shares of common stock at a price of $1.86 per share to Pfizer, which will generate approximately $5.0 million in proceeds for the small-cap.

Additionally, under the terms of the agreement, Icagen has the option to sell Pfizer up to an additional $10 million of common stock at fair market value at the time of exercise, at any time during the next 18 months.

Icagen said it intends to use the proceeds from this private placement to fund R&D and for general corporate purposes. Icagen said it expects the first closing of the transaction to occur on August 20.

Shares of Icagen surged 107.8%, or $2.07, to $3.99 in pre-market trading.

Known on Wall Street as Big Pharma, multibillion-dollar companies such as Pfizer Inc. (NYSE: PFE), Merck & Co., Inc. (NYSE: MRK) and Bristol-Myers Squibb Company (NYSE: BMY) dominate the prescription drug market. But a compelling argument can be made for investing in the biotechnology sector, since biotechs have consistently outperformed the pill companies for the past few years.

While Amgen Inc. (Nasdaq: AMGN) and Genentech Inc. (NYSE: DNA), biotech's biggest names, have fallen on hard times (Amgen's stock has plunged 26% from its January high while Genentech's shares are off 14%), some smaller biotech companies hold promise., some smaller biotech companies hold promise.

One such micro-cap is Antares Pharma, Inc. (AMEX: AIS), a $90 million specialized pharmaceutical company with patented drug delivery platforms including Advanced Transdermal Delivery gels (medications—hormones or other active ingredients—that are applied to the surface of the skin in gel form), reusable needle-free injection systems, disposable mini-needle injection systems and fast-melt oral tablets. In the face of direct competitive pressures from companies developing transdermal gels such as NexMed, Inc. (Nasdaq: NEXM), Bentley Pharmaceuticals, Inc. (NYSE: BNT) and Novavax, Inc. (Nasdaq: NVAX), and players like Bioject Medical Technologies Inc. (Nasdaq: BJCT), which produces needle-free injection systems, Antares has flourished.

The Russell 2000 posted the biggest loss among the major U.S. indices as stocks hit the skids following a rise in government bond yields. The Russell 2000 lost 12.16 points, or 1.43%, to finish at 836.18. The Dow Jones Industrial Average dropped 146.00 points, or 1.07%, to 13,489.42.

Stocks started heading down this afternoon as investors reacted to a rise in the yield of the 10-year Treasury bond. The yield ended the day at 5.146%, above Tuesday’s close of 5.081%. Bond yields first broke through the 5% barrier two weeks ago.

Bond yields help determine rates on loans and mortgages, and an increase suggests that interest rates might move up, making borrowing more difficult and slowing down the economy.

Biotechnology has been among the leaders of the market's latest upmove, and a trio of advisors are now looking at some speculative ideas in the small cap biotech space - a market niche that is known for its high risk and volatility.

Michael Ashbaugh, editor of MarketWatch's The Technical Indicator, sees a pair of small cap firms that he believes are poised for speculative gains. He notes, “Public since October 2005, NxStage Medical (Nasdaq: NXTM) is a small-cap maker of dialysis machines positioned to rise. It initially gapped higher in February, after the dialysis center chain DaVita Inc. bought a $20 million stake in the company.”

Meanwhile, over the past three weeks, Ashbaugh adds, the stock has established a tight range near its 52-week high, “positioning the shares to extend higher."

In addition, he says, “AVI BioPharma (Nasdaq: AVII) is a small-cap biopharmaceutical name positioned to rise. Earlier this month, it gapped above a five-month downtrend and its 50-day moving average. Since then, it's closely observed the 50-day as support, extending its gains."

Gregg Early also see upside opportunity in a speculative, small-cap biotech play -- pSivida Ltd. (Nasdaq: PSDV), an Australian biotech/nanotech company that is focusing  on developing controlled drug delivery technologies. “The company has signed a big deal with Pfizer (NYSE: PFE),” Early says, “and it’s pretty darn big.”

According to the editor of The Real Nanotech Investor, the firm signed a $165 million exclusive worldwide research and licensing agreement with Pfizer for pSivida's drug delivery technologies in ophthalmic applications.

Early explains, “Pfizer has bought $5 million worth of pSivida stock off the Australian exchange and has also received a $9 million private placement of shares at a U.S. price of about $2.20 a share.”

Monogram BioSciences Inc.’s (Nasdaq: MGRM) stock hit a new 52-week-high this morning as investors acted in anticipation of potential approval next week of an HIV drug being manufactured by partner Pfizer Inc. (NYSE: PFE).

In 2006, pharmaceutical giant Pfizer agreed to invest $25 million in South San Francisco-based Monogram and enter into a non-exclusive collaboration to make the company’s HIV test, Trofile, available globally.