Small company stocks take the limelight
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Print | Originally published: May 20, 2013 - 9:44 am
NEW YORK (AP) - Small companies took the limelight Monday as the stock market extended a rally.
The Russell 2000, an index of small-company stocks, rose above 1,000 for the first time. The index is outpacing the Dow Jones industrial average and the Standard & Poor's 500 index this year. Small stocks are doing well because they are more focused on the U.S., which is recovering, and are less exposed to recession-plagued Europe than the large international companies that make up the Dow and the S&P 500 index.
All major indexes edged higher in the afternoon after a slow start to the week. On Friday the market closed out its fourth straight week of gains. The Dow Jones, the S&P 500 and the Russell indexes are all at record levels.
Investors will be watching the Federal Reserve this week for clues about what it plans to do next with its economic stimulus program. On Wednesday Federal Reserve Chairman Ben Bernanke will appear before Congress and the central bank will release minutes of its most recent policy meeting.
The Fed is buying $85 billion of bonds every month to keep long-term interest rates low. That has encouraged investors to put money into stocks instead of bonds.
Policy makers are unlikely to cut back on stimulus just yet since U.S. economic growth is likely to slow in the second quarter, said Scott Wren, a senior equity strategist at Wells Fargo Advisors. As a consequence, Wren said, stocks are likely to continue to rise.
"At some point, we will see some sort of a pullback, but it doesn't seem like it's going to be right now," said Wren. "In the near term we're probably going to trade a little bit higher."
On Monday, The Dow Jones industrial average rose 24 points, or 0.2 percent, to 15,378 as of 12:30 p.m. Eastern Daylight Time. The Standard & Poor's 500 index rose four points, or 0.2 percent to 1,671.
In commodities trading, the price of crude oil rose 90 cents, or 0.9 percent, to $96.92 a barrel.
The price of gold rose for the first day in eight, as the dollar fell. The precious metal climbed $21, or 1.5 percent, to $1,385. Gold has slumped this month as its attraction as an alternative investment has faded this year as the dollar has appreciated.
The U.S. currency is strengthening because investors believe the U.S. economy is in better shape than the Japanese or European economies.
The dollar's rally paused in early trading on Monday, though, and the U.S. currency fell against the euro and the yen. The dollar index also dropped, after climbing to its highest level in close to three years Friday.
In U.S. government bond trading, the yield on the 10-year Treasury note rose to 1.97 percent from 1.93 percent.
The Nasdaq composite index rose four points, or 0.1 percent, to 3,503 points.
Among stocks in focus on Monday:
_ Actavis rose $3.09, or 2.5 percent, to $128.50 after pharmaceutical company said it's buying Warner Chilcott. The all-stock deal, valued at $8.5 billion, would create the third-biggest specialty pharmaceutical company in the U.S.
_ Yahoo edged up 31 cents, or 1.2 percent, to $26.83 after the Internet company said it was buying online blogging forum Tumblr for $1.1 billion.
_ Chesapeake Energy rose 77 cents, or $21.04, to $21.05 after the natural gas producer named Anadarko Petroleum executive Robert Douglas Lawler as its new CEO. He takes over as Chesapeake continues selling assets to pare down an enormous debt burden.
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