The Wall Street Journal-20080130-Omnova Posts 20- Advance- Ambac Soars

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Omnova Posts 20% Advance; Ambac Soars

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Small-cap stocks inched upward, on gains in materials and transportation stocks.

Many investors are beginning to position themselves for the next cycle of economic growth amid hopes rate cuts will spur growth. "With these materials companies, it's just a move into an early cycle group that didn't get an initial bounce this week with the others," said William Sutherland, director of equity research for Boenning & Scattergood.

Watts Water, a maker of water-control valves, rose $1.69, or 6%, to $28.94, while building-materials maker Omnova Solutions jumped 79 cents, or 20%, to 4.75, both on the New York Stock Exchange.

The Russell 2000 index of small-cap stocks rose 2.81 points, or 0.40%, to 705.20. The Standard & Poor's SmallCap 600 added 2.29 points, or 0.62%, to 369.84. The Nasdaq Composite Index put on 8.15 points, or 0.35%, to 2358.06.

Small-cap transportation stocks also rallied, like their larger counterparts. Diana Shipping (NYSE) rose 2.23, or 9%, to 26.66; Genco Shipping, up 5.11, or 13%, to 45.43, on the NYSE; and StealthGas gained 86 cents, or 7%, to 13.87.

Following comments from Assured Guaranty Chief Executive Dominic Frederico that he had "high confidence" a solution would be reached for bond insurers, Ambac Financial rose 1.80, or 16%, to 12.93, and MBIA climbed 1.13, or 8%, to 15.98, both on the NYSE, while Assured Guaranty rose 1.61, or 7%, to 24.08.

Municipal Mortgage & Equity slid 8.01, or 47%, to 9.19 on the NYSE after the Baltimore multifamily real estate debt and equity company cut its quarterly dividend to 33 cents from 52.5 cents.

Earnings reports were key factors, including for ArvinMeritor, up 92 cents, or 7%, to 13.25, on the NYSE. The Troy, Mich., auto-parts maker raised its sales guidance for the full year on expected stronger sales outside of North America.

While JetBlue Airways swung to a fourth-quarter loss, the New York airline climbed 1, or 20%, to 5.94. The New York company posted a narrower loss than analysts were expecting and forecast a 5% to 8% increase in capacity for this year.

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Jerry DiColo and Veronica Dagher contributed to this article.