Hornbeck, La-Z-Boy Advance
Small stocks rose for the second straight session yesterday as a wholesale-inflation report eased interest-rate jitters -- or at least put them off until today.</br></br>The Russell 2000 index of small-cap stocks rose 4.58, or 0.55%, to 837.12, eking out a gain of less than two points for the week so far, after a sharp fall on Tuesday. The S&P SmallCap 600 added 3.18, or 0.74%, to 435.03.</br></br>In particular, some small semiconductor stocks rose sharply. Among catalysts for the sector, Banc of America Securities raised its rating on large-cap Intersil's shares to "buy," saying Wall Street had underestimated the company's growth potential. Intersil rose $1.94, or 6.3%, to $32.75. Small-cap OmniVision Technologies added 54 cents, or 3.5%, to 15.96.</br></br>The producer-price index rose sharply in May, but "core" inflation, which excludes food and energy, was more subdued.</br></br>If core consumer inflation exceeds the average economist expectation of a 0.2% increase, Sean Simko, head of fixed-income management at SEI Investment, expects the 10-year Treasury yield to test the five-year highs above 5.25% set on Tuesday. As the yield is used as a benchmark for corporate borrowing, this would likely buffet small stocks, which are particularly dependent on the debt markets.