By Anora Mahmudova and Carla Mozee, MarketWatch
MannKind leaps, Dean Foods slumps
NEW YORK (MarketWatch) -- U.S. stocks advanced Monday, led by a
rally in small-cap companies, though continued tensions in Ukraine
and the Middle East put a cap on the S&P 500's gains.
The Russell 2000 (RUT) rose 10 points, or 0.9%, to the
preliminary 1,141.58. The index of small companies has outperformed
the large-cap S&P 500 in the five of the past six sessions, and
many analysts see the leadership of small stocks as a sign of
improving markets.
The S&P 500 (SPX) rose 5.32 points, or 0.3%, to 1,936.91,
Consumer staples and technology stocks lead the gains.
The Dow Jones Industrial Average (DJI) gained as much as 75
points in the morning, but pared gains in the afternoon. The
blue-chip index closed 16.05 points, or 0.1%, higher at
16,569.98.
The Nasdaq Composite (RIXF) ended the day up 30.43 points, or
0.7%, at 4,401.33.
Monday's rally is being described as a relief rally after a
selloff during the previous two weeks. The near-4% pullback on the
S&P 500 began as investors fretted the Fed might raise rates
sooner than expected in light of recent economic data that were
stronger than expected.
Jay Feuerstein, managing director of alternative strategies at
money manager Manning & Napier, says Wall Street is worrying
unnecessarily. "The Fed under Janet Yellen wants to see a much
stronger labor market improvement before raising rates and will
tolerate a rise in inflation to aid the economy," he said.
He said low rates and the improving economy make equities
attractive.
"When dividends are yielding higher than 10-year Treasurys,
equities will continue to outperform, and we expect a big rally in
the fourth quarter," he added.
Among geopolitical worries, the situation in Iraq remained fluid
,with air strikes slowing the advance of the militant group ISIS.
But chaos ensued in Bagdad following an appointment of a new prime
minister by the president.
Meanwhile, Russia announced it would send a humanitarian convoy
into Eastern Ukraine. That could put a temporary stop to gunfights
between the Ukrainian forces and rebels in the region.
Individual stocks
Shares of Mannkind (MNKD) rallied 4.6% after the company reached
a licensing deal with Sanofi (SNY) to develop and sell inhaled
insulin drug Afreeza in the U.S.
Shares of Tesla Motors Inc.(TSLA) rallied 4.6% after an upgrade
to buy from Deutsche Bank. The bank also increased its price target
on the stock to $310, from $220 a share.
Shares of Dean Foods (DF) slumped 3.9% after the milk and food
company reported a wider-than-expected loss and withdrew its
full-year outlook.
Kinder Morgan (KMI) jumped 8.8% following plans to consolidate
its oil-and-gas pipeline empire into a single company in a $44
billion deal. (Read more about the day's notable movers here:
http://www.marketwatch.com/story/priceline-and-dean-foods-are-stocks-to-watch-monday-2014-08-08.)
In other markets, 10-year Treasury yields (10_YEAR) rose. Oil
futures (CLU4) posted minor gains, but gold futures (GCZ4)
retreated. European stocks rose following last week's losses, and
Asian shares advanced, with Japan's Nikkei Average up 2.4%.
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Why small-cap stocks will likely feel the most pain
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