Russell 2000 loses grip
The Russell 2000 (NYSE: IWM) has trimmed its earlier gains and gone flat. At 2:48 p.m. ET, the small-cap index had retreated 0.45 points, or 0.06%, to 701.13. The Dow Jones Industrial Average (INDU) was up 2.52 points, or 0.02%, to 12,267.65.
Small caps abruptly turned around and dropped into negative territory at about 2 p.m. ET following news that a recession has become more likely, according to Richmond Federal Reserve Bank President Jeffrey Lacker.
Lacker told an audience at Marshall University’s Lewis College of Business that the risks of a recession have recently increased while inflation has not moderated as some expected, according to news reports this afternoon.
The Fed official, who is a voting member of the Federal Open Market Committee, is also quoted as saying that he believes economic growth will be sluggish during the first half of 2008.
News of Lacker’s comments extinguished the modest rally that lifted stocks out of the gate after the U.S. Labor Department reported that productivity increased at an annual rate of 1.8% during the fourth quarter of 2007, outpacing economists’ expectations.
On the topic of Wall Street’s expectations, travel website operator Travelzoo Inc. (Nasdaq: TZOO) reported a fourth-quarter net income that was below what analysts were projecting, causing its shares to decline more than 20%.
Allis-Chalmers Energy Inc. (NYSE: ALY) also saw its stock suffer following news that the provider of oilfield services was downgraded to “market perform” from “outperform” by an analyst.
In contrast, Cambridge, Mass.-based Forrester Research, Inc. (Nasdaq: FORR), which conducts technology and market research, saw its fourth-quarter revenue climb to $58.4 million from $48.9 million a year earlier.
