Earnings worries hit small caps
The Russell 2000 (NYSE:IWM) fell hard as investors worried about corporate earnings and reacted to news of record high oil prices. The small-cap index dropped 13.54 points, or 1.90%, to 698.38. The Dow Jones Industrial Average let go 49.18 points, or 0.39%, to 12,527.26.
On a year-to-date basis, the Russell 2000 has declined 8.83%, while the Dow has retreated 5.56% and the S&P 500 is down 7.75%.
Small-cap stocks suffered more than their bigger brothers today as fears that the sagging economy will weaken corporate earnings led to a sell-off. United Parcel Service, Inc. (NYSE:UPS) reported after the close on Tuesday it lowered its first-quarter profit forecast. The Atlanta, Ga.-based company is considered a bellwether because its performance is closely related to the sales of other businesses.
More bearish news came after the start of trading following news reports that investment bank Merrill Lynch & Co., Inc. (NYSE:MER) will likely post a first-quarter loss due to its exposure to subprime loans and commercial real-estate debt.
In economic news, the price of oil briefly touched a record high of $112.21 a barrel on news after the opening that inventories unexpectedly fell for the week ended April 4, according the Energy Information Administration. The previous record of $111.80 a barrel was set on March 17.
High oil prices have contributed to the weakening of the U.S. economy by sapping consumer demand.
The small-cap index opened in the green but fell within minutes and remained in negative territory for the remainder of the session. Among the losers was railroad freight car equipment maker The Greenbrier Companies, Inc. (NYSE:GBX), which announced before the start of trading that second-quarter revenue missed analysts’ projections.
Elsewhere, airline companies were the worst-performing industry group. Shares of Memphis, Tenn.-based Pinnacle Airlines Corp. (Nasdaq:PNCL) descended 1%, while Alaska Air Group, Inc. (NYSE:ALK) decreased by 5%.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
• China Shen Zhou Mining & Resources Inc. (AMEX:SHZ), up 12% to $6.25.
• Synaptics Inc. (Nasdaq:SYNA), up 9% to $28.31.
• First M&F Corp. (Nasdaq:FMFC), up 8% to $15.72.
• The Pantry, Inc. (Nasdaq:PTRY), down 26% to $16.20 on news it expects a second-quarter loss.
• Nektar Therapeutics (Nasdaq:NKTR), down 25% to $5.39 on news one of its products may cause cancer.
• AMAG Pharmaceuticals, Inc. (Nasdaq:AMAG), down 13% to $37.02.
Volume leaders:
• Nektar Therapeutics (Nasdaq:NKTR) 13,647,900 shares traded.
• NutriSystem Inc. (Nasdaq:NTRI) 6,041,300 shares traded.
• USEC Inc. (NYSE:USU) 3,956,600 shares traded.
The day saw 29 small-cap stocks set 52-week lows, while six small caps established a 52-week high.
