Large decline for small caps
The Russell 2000 (NYSE: IWM) is posting large losses with less than an hour left in the session. At 3:10 p.m. ET, the small-cap index was down 12.67 points, or 1.92%, to 647.44. The Dow Jones Industrial Average (INDU) had declined 140.19 points, or 1.18%, to 11,753.50.
Stocks small and large are falling as recession fears take hold on Wall Street. Friday’s disappointing jobs report, which showed that payrolls plunged 63,000 in February, led many observers to conclude that the U.S. economy is either in or will soon be in a recession.
A report by investment bank The Goldman Sachs Group, Inc. (NYSE: GS) released before the start of trading forecasts that the U.S. Federal Reserve will respond by lowering its target federal funds rate to 2% by late April.
An analyst with the New York-based company thinks the Fed will lower its target interest rate 0.5% during its next two regularly scheduled meetings, the first of which is on March 18. However, the report claims that an emergency rate cut as early as Monday can’t be ruled out.
The federal funds rate, the rate commercial banks charge each other for overnight loans, currently stands at 3%.
Small-cap ExpressJet Holdings Inc. (NYSE: XJT) is contributing to the bearish mood. The Houston-based company, which has investments in the air transportation sector, announced before the opening that it swung to an adjusted fourth-quarter loss of $27.6 million, or $0.52 per share, compared with a profit of $22.8 million, or $0.39 per share, a year earlier.
“Like all carriers, the issue is becoming fuel and we’re going to continue to monitor that and, as we come into the summer months, we’re going to verify that we’re generating more cash operating the aircraft than not,” CEO James Ream said during a conference call.
Elsewhere, shares of Comtech Group Inc. (Nasdaq: COGO) are higher following news before the start of trading that the seller of component parts for electronic devices and equipment has approved the repurchase of up to 5 million shares of its common stock.
