The Wall Street Journal-20080125-Techs- Day- Synaptics Rallies 13-
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Techs' Day: Synaptics Rallies 13%
Trading in small-capitalization stocks was uneven as strong earnings for several technology companies were offset by mixed reaction to an economic-stimulus package many hope will drive consumer spending.
Several large-cap technology stocks, including Qualcomm and eBay, reported earnings growth for the most recent quarter, driving up the tech-heavy Nasdaq and filtering into small caps. Synaptics, up 13% to 31.43, and Take-Two Interactive Software, rising 11% to 16, mirrored the moves of their larger counterparts. Plexus rose 2.36, or 12%, to 22.20, after posting an 80% first-quarter income jump.
"These earnings are better for some of the technology and cyclical companies than I would have thought," said Stephen Lieber, chief investment officer for the Alpine Dynamic Balance Fund, who noted industrial-type businesses, with a technological and innovative bias, have shown sustained demand for their products.
The Russell 2000 index of small-capitalization stocks fell 0.71 points, or 0.1%, to 692.72. The Russell has now fallen in four of the last five sessions, and is down 9.6% for the year.
The Standard & Poor's SmallCap 600 rose 0.42, or 0.1%, to 362.45, but remains down 8.3% for the year to date.
Small caps had a noticeable uptick after congressional leaders announced a completed agreement with the White House on a stimulus package that would give individual refunds of up to $600 a person.
Energy stocks were behind some of yesterday's gains, as the financial-stimulus plan helped drive a 2.8% rise in the price of oil. Leading the growth in energy were Swift Energy, up 1.72, or 4%, to 41.36, and Penn Virginia, which tacked on 1.10, or 3%, to 42.19 (both NYSE).
The utilities sector, regarded as a strong defensive play, declined on a rise in consumer-confidence resulting from the stimulus package and on a decline in jobless claims as reported by the Labor Department. The larger Dow Jones Utility Average fell 11.78, or 2.3%, to 491.99, led by declines for large caps Exelon and American Electric Power. Decliners among small-cap utilities included El Paso Electric, down 0.73, or 3%, at 21.35, and UIL Holdings, off 1.02, or 3%, to 32.94 (both NYSE).
Less than a day after monoline insurers got a lift from the impact of a potential bond-insurance bailout, the fledgling industry once again retreated after regulators acknowledged it would take time to help the bond companies. On the news, MBIA slid 13% to 14.40, while Ambac Financial fell 17% to 11.33 (both NYSE). Security Capital (NYSE) fell 1.16, or 31%, to 2.63, after the bond insurer lost its crucial triple-A rating and said it has abandoned plans to raise new capital, citing instability in the markets.
Among companies buoyed by earnings reports was World Acceptance, which rose 5.70, or 25%, to 28.75. The Greenville, S.C., consumer- finance company posted a 4% rise in quarterly earnings on higher loan demand.
