Anchor Bancorp Drops 16%; Pioneer Drilling Up 8.4%
by Kejal Vyas
Renewed concerns over large financial firms and their ability to withstand a global economic correction trickled over to other sectors Tuesday, helping small-capitalization stocks close in negative territory.
Weighing on the financial sector was an avalanche of less-than-encouraging news, starting with several analysts warning about Goldman Sachs’s earnings.
Additionally, J.P. Morgan Chase said it is taking a $1.5 billion write-down on mortgage-backed securities, Morgan Stanley said it is buying back $4.5 billion in auction-rate securities and Wachovia revised its second-quarter loss lower.
Among small-cap financials, regional banks made up the biggest losers as Anchor Bancorp Wisconsin dropped $1.48, or 16%, to $7.97 after posting a 44% drop in fiscal-first-quarter net income. Not too far behind were shares of Sterling Financial, which slumped a dollar, or 10%, to 9.17.
Tuesday’s move for the sector halts a short-lived rotation into the financial sector as energy stocks have fallen in tandem with oil prices and investors seemed to have been testing the financial waters again.
“It’s like every time it seems like things are looking up, we get hit by another series of bad news,” said William Rutherford, president of Rutherford Investment Management.
For the session, the Russell 2000 index of small-capitalization stock fell 6.12, or 0.8%, to 744.94, while the Standard & Poor’s SmallCap 600 index declined 3.44, or 0.9%, to 391.51.
Tuesday’s session snapped a two-day winning streak for both indexes, but still only marks the seventh time both have dropped in the past 20 sessions.
Energy stocks were among the only sectors on the plus side Tuesday, even as crude oil continued its descent on the New York Mercantile Exchange. Pioneer Drilling jumped 1.36, or 8.4%, to 17.54.
VeraSun Energy shares rose 72 cents, or 10%, to 7.75 on the New York Stock Exchange after the company posted a 58% rise in second-quarter net income as the acquisition of rival US BioEnergy Corp. helped offset high corn costs. Chief Executive Don Endres also said he sees growing acceptance of ethanol among gasoline refiners as interest in alternative fuels continues to rise.
Shares of Fossil jumped 3.10, or 11%, to 31.94 after the watch maker reported a 71% surge in net income amid the weaker dollar and improved sales. The results prompted the company to again raise its full-year earnings forecast.
For the most part, consumer discretionary stocks fell, led lower by Meritage Homes, which slipped 1.85, or 8.5%, to 19.89 on the NYSE.
Industrial stocks also declined as Lawson Products reported a widened second-quarter net loss and said it agreed to pay a $30 million penalty to settle a gift probe that led to 13 people being indicted in 2007. Shares of Lawson dropped 3.18, or 9.2%, to 31.27.
Zoltek’s fiscal-third-quarter net income fell 54%, coming in well below analysts’ estimates. Shares closed down 2.76, or 15%, to 15.52.
Moving lower with the broader technology sector was ACI Worldwide. The New York banking-transaction software maker reported second-quarter net income that fell short of analysts’ projections. Shares fell 31% to 14.56.
Sonus Networks, slid 70 cents, or 17%, to 3.49 after the maker of voice-over-Internet software and hardware cut its earnings outlook for the rest of the year.
Comverge reported a second-quarter loss wider than analysts anticipated. Shares of the East Hanover, N.J., company, which helps customers of utilities curb electricity use, declined 2.39, or 27%, to 6.55.
Altus Pharmaceuticals said a Phase 3 trial for its treatment for fat-absorption problems in cystic fibrosis patients was successful, but shares plunged 2.44, or 49%, to 2.50 as data was different for trial patients in different regions. The company said it plans to meet with the Food and Drug Administration to discuss the discrepancies.
Nelnet (NYSE) shares gained 81 cents, or 6.9%, to 12.50 after the Lincoln, Neb., student loaner swung to a second-quarter profit as results beat Wall Street expectations.
Middleby agreed to acquire high-speed ovens maker TurboChef Technologies for about $200 million in cash and stock, valuing TurboChef at a 16% premium to Monday’s closing price. Shares of TurboChef rose 38 cents, or 6.8%, to 5.98, while Middleby fell 4.53, or 7.9%, to 53.07.