Russell 2000 looking bearish
The Russell 2000 (NYSE: IWM) is declining on news that the strain from the subprime meltdown has spread.
At 12:04 p.m. ET, the small-cap index had retreated 10.53 points, or 1.54%, to 673.21. The Dow Jones Industrial Average (INDU) was off 133.10 points, or 1.09%, to 12,121.89.
Stocks small and large are in the red following news that residential mortgage lender Thornburg Mortgage Inc. (NYSE: TMA) has failed to meet a margin call of about $28 million. Similarly, investment company Carlyle Capital Corp. Ltd. announced before the start of trading that it has also failed to meet a margin call and has received a notice of default from one of the banks that helps finance its portfolio of mortgage securities.
A “margin call” is when banks call in their loans to investors, who are in turn forced to sell off assets to raise cash, leading to a reduction in the price of those assets and more margin calls and losses.
In other news, U.S. retailers generally beat low same-store expectations in February. Leading the way was Wal Mart Stores, Inc. (NYSE: WMT), the world’s largest retailer, which reported a 2.6% increase in same-store sales.
Turning to small-cap retailers, Mothers Work Inc. (Nasdaq: MWRK) reported before the opening that sales same-store sales jumped 4.8%, but that news has not helped its stock price. Shares of the Philadelphia-based retailer of maternity clothing are down about 10%.
Meanwhile, women’s apparel retailer The Wet Seal, Inc. (Nasdaq: WTSLA) announced before the start of trading that same-store sales dropped 8.2%, far worse than the forecasted decline of 2.2%. Shares of the Foothill Ranch, Calif.-based company have declined.
Elsewhere, New York-based Cache Inc. (Nasdaq: CACH) boosted its stock price when it announced before the opening that February same-store sales rose 4%.
