RESENDING WITH NEW SLUG (EARLIER VERSION MISTAKENLY CALLED BIGCAPS) UPDATE:US Small-Caps Lower On Sinking Consumer, Materials Cos
By Geoffrey Rogow Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Concerns about the state of the consumer and the continued push on hedge funds once again sent small-caps deep into the red Wednesday.
Setting the tone for small retailers Wednesday, Bob Evans slid $1.73, or 9.7%, to $16.16, and Spectrum Brands lost 16 cents, or 19%, to 68 cents, on the New York Stock Exchange, after they provided similarly disappointing quarterly reports. On the reports, short sellers flooded into consumer discretionary names, expecting similar stock declines for many of the more discretionary of retailers expected to post earnings in the coming weeks.
Among the other small consumer discretionary names moving lower were Live Nation, off 2.20, or 27%, to 5.85, and Champion Enterprises, down 41 cents, or 30%, to 95 cents, both on the NYSE.
Lead by the consumer space, the Russell 2000 index of small-capitalization stocks declined 29.49 points, or 6.11%, to 452.80. The index is now within five points of its Oct. 27 closing low of 448.4, which had marked its lowest level in more than five years.
The Standard & Poor's SmallCap 600 lost 14.79, or 5.73%, to 243.19.
Both indexes have now declined in five of the last six sessions.
With oil, gas and metals prices also closing lower, energy and materials stocks were another detriment to the small-cap space Wednesday. Weighing on the prices of commodities and related stocks partly stems from the consumer concerns, which highlight a belief that the outlook for economic growth and demand is continuing to dim further.
The move lower in the energy space included Matrix Service, down 1.69, or 16%, to 8.92, while the drop for materials names was led by AK Steel (NYSE), off 2.53, or 25%, to 7.73, after the steel company said it was cutting production in the U.S.
Moreover, both the energy and materials sectors are heavily controlled by the hedge fund space, which had ratcheted up their exposure to both sectors during the move on commodities this summer. And, as hedge funds have been force to raise their cash positions to meet redemptions, this sectors have been hurt.
"The trade of the day continued to be an unwind...a lot of the trading is due to forced redemptions and small-cap names will feel that more than anyone," said Todd McCallister, a managing director and portfolio manager for Eagle Asset Management.
In one possible positive sign, KarpReilly Capital Partners LP and H.I.G. Capital offered to buy Charlotte Russe Holding in a deal valued at $188.1 million to $198.6 million, sending the women's apparel and accessories retailer's shares up 1.26, or 18%, to 8.15.
The offer from KarpReilly and H.I.G. comes a day after a survey from Ernst & Young reported that 49% of chief executives of Russell 2000 constituents said a merger or acquisition would be their most likely source of growth in next 12 months.
"Private equity has an abundance of cash. We know the mega-deals are shut down as mega-deals are difficult to finance, but this is a group with capital available to invest and [small-caps] are a likely place for them to invest in this market," said Maria Pinelli, Americas director of strategic growth markets at Ernst & Young.
Scotts Miracle-Gro (NYSE) surged 3.07, or 13%, to 27, after Spectrum Brands, its closest competitor, said it will shut down its growing-products segment. Marysville, Ohio, lawn-and-garden product company Scotts said the move could create the possibility of increased market share.
Among Wednesday's flood of earnings reports, JA Solar lost 96 cents, or 29%, to 2.38, as the China-based solar-cell manufacturer swung to a third-quarter loss and projected fourth-quarter results well below analysts' expectations.
NBTY's fiscal fourth-quarter net income slumped 64% on lower margins, acquisition-related costs, weaker sales in European operations and increased freight costs. The Bohemia, N.Y., nutritional supplements company closed down 4.70, or 22%, to 16.92, on the NYSE.
Redmond, Wash.-based Concur Technologies, which provides expense-management software services, gained 1, or 4.9%, to 21.29. The company posted fiscal fourth-quarter net income up 37%, aided by a surge in subscription revenue.
Shares of Richmond life insurer Genworth Financial continued to plummet, a day after the stock fell 54%, as investors began to recognize the company faces painful choices to cover $1.1 billion in debt coming due in the middle of 2009. Genworth (NYSE) closed down 24 cents, or 19%, at 1.
Airline stocks, which typically jump when oil slides, bucked that trend on Wednesday as investors seemed more concerned about a dropping consumer spending environment than falling crude. Included in the decliners, Houston-based Continental (NYSE) lost 2.05, or 15%, to 11.72.
Standard & Poor's cut its credit ratings on Lake Forest, Ill., recreational products maker Brunswick for the second time in as many months, citing a likely bank covenant violation in the fourth quarter. Brunswick closed down 76 cents, or 24%, at 2.39 on the NYSE.
- By Geoffrey Rogow; Dow Jones Newswires; 201-938-5360; geoffrey.rogow@dowjones.com
(Lavonne Kuykendall contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=gyqrrrOUgvITV9NeLavKMw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 12, 2008 17:27 ET (22:27 GMT)

Publié le 12 novembre 2008 Copyright © 2008 Dowjones