Russell 2000 stumbles
The Russell 2000 (NYSE: IWM) and the Dow lost ground as news of a strike at General Motors weighed heavy on investors’ minds. The small-cap index fell 7.31 points, or 0.90%, to 805.80. The Dow Jones Industrial Average (INDU) dropped 61.13 points, or 0.44%, to 13,759.06.
Workers at General Motors Corp. (NYSE: GM) took to the street today as the automaker failed to reach a labor agreement with the United Auto Workers.
The nationwide strike is the first in more than 30 years at the Detroit-based company and comes at a time when the troubled GM is trying to cut costs and raise its head above water after two years of steep losses.
The dispute revolves around GM’s need to reduce labor and health-care costs and the UAW’s focus on protecting the benefits of 73,000 members who work at the company’s U.S. production facilities. Union leaders declared a willingness to continue negotiations and most observers expect the dispute to be resolved quickly.
News of the strike emboldened the bears and scared away the bulls.
Otherwise, the day began with futures pointing up and stocks poised to rise following news that tech sector heavyweights have received analyst upgrades.
Shares of Apple Inc. (Nasdaq: AAPL) added more than 2% on news that Citi Investment Research, the research arm of financial services giant Citigroup Inc. (NYSE: C), raised its target price to $185 from $160. Citi reiterated its “buy” rating and cited lower cost estimates and an upbeat outlook for upcoming product launches.
Mobile device maker Motorola Inc. (NYSE: MOT) also gained after RBC Capital Markets upgraded the Schaumburg, Ill.-based company to “outperform” from “sector perform.”
Adding to the bullish pre-market sentiment was EMC Corp. (NYSE: EMC), a maker of data-storage computers and software, which was upgraded by both Citigroup and Bear, Stearns & Co. (NYSE: BSC).
The Russell 2000 opened in the red but quickly fell before regaining its balance. Small-cap stocks held on to slim gains until about 1 p.m. ET, when the bears overpowered the bulls and the index fell. The Dow was posting stronger during the first half of the session but suffered the same fate.
In economic news, the International Monetary Fund said that the threat to global financial has increased. “Markets are likely to go through a protracted adjustment period following recent financial turbulence triggered by the collapse of the U.S. subprime mortgage market,” the organization said in its semi-annual Global Financial Stability Report. The recent turbulence could slow global economic growth, the report continues, but governments should not rush to embrace regulation as a solution.
