Credit jitters down small caps
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are in negative territory as credit fears return to Wall Street. At 1:46 p.m. ET, the small-cap index had shed 9.67 points, or 1.21%, to 788.11. The Dow Jones Industrial Average (INDU) was down 108.44 points, or 0.80%, to 13,486.66.
Financial stocks are leading the way down after Citigroup Inc. (NYSE: C) announced before the start of trading that it expects additional losses of up to $11 billion after already suffering $6.5 billion in credit-related losses in the third quarter.
Analysts are estimating that the credit problems will negatively affect Citibank in the fourth-quarter and lead to a net loss.
The news brought out the bears and spooked investors, who were hoping that this summer’s credit problems were in the past, but recent events have revived the issue. Investors will also want to see if other banks and brokerages report additional losses.
Many financial institutions bought securities backed by subprime mortgages that have become worthless in the wake of the recession in the U.S. housing market and the wave of foreclosures by cash-strapped homeowners.
Small-cap stocks are also sagging this afternoon, with Sanders Morris Harris Group Inc. (Nasdaq: SMHG) down 2% while Stifel Financial Corp. (Nasdaq: SF) has dropped 6%.
Elsewhere, the price of oil has eased $0.36 to $95.57.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Multi-Fineline Electronix Inc. (MFLX), up 29% on news of a higher fourth-quarter profit.
• Ballard Power Systems Inc. (BLDP), up 13% on news it is reviewing strategic options.
• Virco Manufacturing Corp. (VIRC), up 14%. A company representative could not be reached for comment.
Biggest percentage losers:
• Gevity HR Inc. (GVHR), down 32% on news of a lower third-quarter profit and a disappointing fourth-quarter guidance.
• Somaxon Pharmaceuticals Inc. (SOMX) down 21%. An investor relations representative could not be reached for comment.
• Glu Mobile Inc. (GLUU), still falling, down 17% after news on Friday of a disappointing fourth-quarter and 2008 guidance.
