The Wall Street Journal-20080123-Flagstar- Cash America- MBIA Gain
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Flagstar, Cash America, MBIA Gain
Small-capitalization stocks finished near the black on the backs of the more-downtrodden stocks in recent weeks.
Still, despite positive movement for much of the afternoon, small caps closed the session down as the Russell 2000 index of small- capitalization stocks fell 1.61 points, or 0.24%, to 671.57, while the Standard & Poor's SmallCap 600 eased 0.08, or 0.02%, to 350.52.
The decline for small caps, though not as big as their larger counterparts, did little to quell fears stemming from the mass selloffs of the past week, when concerns over the U.S. economic outlook and credit-market woes dragged small caps into bear-market territory. The Russell has fallen 3.7% in a week, while the S&P 600 has dropped 3%. By comparison, the larger S&P 500 has fallen 5.1% in a week.
Though small caps ended slightly negative, there was some uptick from financials, which have weighed heavily on the market in recent weeks, following a pre-market rate cut from the Federal Reserve.
Randy Frederick, director of derivatives for Charles Schwab said many companies with credit issues, which can affect cash-strapped small caps more than their larger counterparts, got a boost related to the interest-rate cuts. "It's a little too early to call, but anyone related to banking or finance would benefit from the rate cut," he said.
Among the financials leading the way were Flagstar Bancorp, up 60 cents, or 11%, to $6, and Cash America International, rising 2.17, or 8%, to 29.43 (both NYSE).
Bond insurers, a sector that has been hit hard amid the credit crunch, rose on hopes regulators will prop up the industry by attracting new capital. Ambac Financial Group rose 1.77, or 29%, to 7.97, while MBIA climbed 3.98, or 47%, to 12.53 (both NYSE).
Despite a continued drop in the price of oil, which did rise slightly after the Fed move, several energy stocks eased, including Matrix Service, down 1.10, or 5.9%, to 17.50, and Pioneer Drilling (NYSE), off 51 cents, or 4.5%, to 10.72.
Retailers had an unexpected rally, led by a 7.3% gain for large cap Home Depot, amid hope the sector has bottomed amid lower interest rates. Circuit City Stores (NYSE) was a major beneficiary, rising 79 cents, or 21%, to 4.55, after the founder of Hollywood Entertainment reported a 6.5% stake in the electronics retailer and said he was considering acquiring the company.
Dominion Homes, which had been among the most downtrodden in the consistently falling housing sector, rallied after agreeing to be acquired for 65 cents a share by a group consisting of companies affiliated with Angelo Gordon, Silver Point Capital and Dominion's largest shareholder, BRC Properties. Dominion rose 19 cents, or 46%, to 60 cents.
Reports from the Food and Drug Administration dragged down at least two small caps, as Northstar Neuroscience fell 6.99, or 84%, to 1.37, after the Seattle medical-device company said a stroke-rehabilitation study for its brain stimulation device didn't meet its primary endpoint.
CytRx slid 49 cents, or 23%, to 1.60, after the Los Angeles drug developer said the FDA placed on clinical hold the company's Phase IIb clinical trial with arimoclomol for the treatment for amyotrophic lateral sclerosis, also known as ALS, or Lou Gehrig's disease.
Perini (NYSE) rose 4, or 14%, to 32.41, after the Framingham, Mass., general-contracting-services company said it reached an interim agreement with Deutsche Bank to receive payment for construction work on the Cosmopolitan Resort and Casino project in Las Vegas.
Getty Images (NYSE) jumped 2.81, or 13%, to 24.75, after the Seattle media supplier confirmed its board is exploring alternatives that include continuing talks with "various interested parties."
Corinthian Colleges fell 3.34, or 31%, to 7.55, after the Santa Ana, Calif., postsecondary-education company cut its fiscal 2008 earnings view after disclosing that SLM and two other lenders won't make private loans available for the company's subprime borrowers.
Quintana Maritime fell 49 cents, or 3%, to 15.16. The Greek drybulk shipping company concluded its strategic sales process, noting it didn't receive any proposals that would have led to a financially attractive deal.
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Karen Talley contributed to this article.
