The Wall Street Journal-20080214-DealerTrack Leads Rally- SPSS Gains

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DealerTrack Leads Rally, SPSS Gains

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Small-capitalization stocks leapt forward, led by the technology and retailing sectors, as small stocks marked their biggest one-day increase in almost two weeks.

Technology stocks, which have been beset by spending concerns and less-than-promising quarterly reports in recent weeks, got a reprieve yesterday after large-cap chip equipment maker Applied Materials reported a better-than-expected fiscal second-quarter profit and noted strong gains in its solar business.

"Tech, in general, is cheap now because it trades at a market multiple with much better long-term prospects for both top- and bottom-line growth," said David Klaskin, chief investment officer for Oak Ridge Investments in Chicago.

Leading the charge for technology was DealerTrack, up $2.57, or 11%, to $26.22, and SPSS, which tacked on 5.65, or 18%, to 37.15, after the statistical software maker reported higher fourth-quarter earnings.

Meanwhile, small-cap solar companies also gained following Applied Materials' earnings report, as well as First Solar posting a jump in fourth-quarter net income. Notably, Ascent Solar Technologies rose 2.35, or 16%, to 17.39, and Evergreen Solar jumped 1.23, or 12%, to 11.34.

For the session, the Russell 2000 index of small-cap stocks rose 16.45, or 2.33%, to 721.93. The Standard & Poor's SmallCap 600 increased 7.64, or 2.05%, to 380.17.

Both indexes have now risen each day this week, marking the first three-day gain for small caps in 2008.

Prior to the opening bell, the Commerce Department said U.S. retail sales rose 0.3% in January, beating the forecast of Wall Street economists. On the report, several consumer discretionaries gained, including Stein Mart, up 43 cents, or 7.5%, to 6.19, and Buffalo Wild Wings, which increased 2.85, or 12%, to 26.25, after the restaurant chain operator posted higher fourth-quarter revenue.

Energy companies also lifted the market as crude-oil futures settled slightly higher on supply concerns. Among the small-cap energy gainers were Matrix Service, up 2.18, or 11%, to 21.19, and Natco Group, rising 3.46, or 8.4%, to 44.49 on the New York Stock Exchange.

Meanwhile, MGIC Investment (NYSE) declined 1.57, or 11%, to 12.61, after the Milwaukee mortgage insurer swung to a fourth-quarter loss and established a $1.2 billion reserve to cover future losses from the "credit crunch." On the heels of MGIC's earnings report and the Mortgage Bankers Association disclosing that mortgage applications fell a seasonally adjusted 2.1% last week, several mortgage insurers declined, including PMI Group, off 1.15, or 14%, to 7.24, and Radian Group, down 81 cents, or 10%, to 7.33, both on the NYSE.

Mirroring the gains for some of its consumer-discretionary counterparts, Acco Brands (NYSE) rose 2.13, or 16%, to 15.80, after the Lincolnshire, Ill., office-products maker posted adjusted fourth- quarter earnings above Wall Street expectations.

Jones Apparel rose 1.70, or 11%, to 17.15, on the NYSE, after the New York clothing and footwear company reported a narrower loss than Wall Street expected for the fourth quarter. Jones Apparel also said late yesterday that Wal-Mart Stores will begin carrying the l.e.i. brand for juniors, junior plus and girls at stores this summer.

Against the upward trend, Blue Nile slid 9.18, or 17%, to 44.67. The Seattle online jewelry retailer forecast first-quarter earnings below analysts' expectations on relatively flat net sales and named President Diane Irvine to the additional post of chief executive.

Journal Communications fell 79 cents, or 9.6%, to 7.46, on the NYSE, after the Milwaukee media company posted lower fourth-quarter earnings and forecast lower first-quarter publishing revenue on challenges in classified advertising.

Two notable technology stocks declined. Aftermarket Technology slipped 3.65, or 14%, to 21.98, as the Downers Grove, Ill., engineering and supply-chain logistics services provider forecast 2008 earnings below Wall Street expectations. Also, Anadigics, a Warren, N.J., maker of radio frequency circuits, declined 1.50, or 14%, to 8.86.