The Wall Street Journal-20080115-NovaStar Slips With Layoff News
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NovaStar Slips With Layoff News
A rally for some of the companies most downtrodden in recent weeks helped give small-capitalization stocks some breathing room off of recent 52-week-lows.
"It's just the kind of rally for small stocks you would expect after the beating we took the last couple weeks," said Stephen Sachs, director of trading for Rydex Investments.
Mr. Sachs said much of Monday's strength came from "a pretty standard reversal," led by rallies for technology and semiconductor companies. The few gainers for the back-half of 2007 and into 2008 -- health care, biotechnology and utilities -- were all down to relatively flat for the day.
The Russell 2000 index of small capitalization stocks rose 7.83 points, or 1.11%, to 712.48, recouping roughly half of Friday's losses. The Russell closed Friday at a 52-week-closing low of 704.65, down 15.56.
The Standard & Poor's SmallCap 600 increased 4.11, or 1.13%, to 368.65.
Helping drive part of the market upward were strong moves for many trucking companies after Bear Stearns raised its rating on the sector to "market weight" from "underweight." Heartland Express was up 46 cents, or 3%, at $14.08; Arkansas Best, rising 1.36, or 7%, to 19.51; and Werner Enterprises, up 67 cents, or 4%, at 16.79.
Golden Cycle Gold agreed to be bought by large-cap AngloGold Ashanti for $149 million. Shares of the Colorado Springs, Colo., metal properties miner jumped 3.70, or 35%, to 14.20, on the news.
A.S.V. rose 5.50, or 45%, to 17.79, after the rubber-track-loaders and accessories maker agreed to be acquired by Terex for $18 a share, or $488 million. Large-cap Terex closed trading up 3.81, or 7%, at 56.74, on the New York Stock Exchange.
On the buy-out front, Bright Horizons Family Solutions signed an agreement to be acquired by an affiliate of Bain Capital for $48.25 a share, or $1.3 billion. Shares of the Watertown, Mass., child-care and early-education services company closed trading at 44.86, up 12.07, or 37%.
Some small-cap financials weighed down the market thanks to subprime-related issues.
Downey Financial slipped 3.63, or 13%, to 24.45, on the NYSE. The bank holding company boosted its nonperforming assets level after disclosing some modified loans should be accounted for as troubled debt. NovaStar Financial also dropped, falling 84 cents, or 29%, to 2.08, on the NYSE, after the mortgage lender said it will lay off 85% of its work force and let its mortgage licenses lapse.
ArvinMeritor tacked on 1.35, or 14%, to 11.07, after KeyBanc Capital Markets raised its rating on the Troy, Mich., transport industry supplier to buy from hold, citing higher North American production for certain products and a cost-savings initiative.
FCStone Group rose 5.88, or 13%, to 52.40, after the Kansas City risk-management firm reported fiscal first-quarter earnings above year-ago results and analysts' expectations.
