Russell 2000 loses steam
The Russell 2000 (NYSE: IWM) and the Dow have trimmed their earlier gains and are moving erratically on news that a major bond insurer is raising capital. At 2:54 p.m. ET, the small-cap index was up 2.81 points, or 0.41%, to 683.79. The Dow Jones Industrial Average (INDU) was up 13.19 points, or 0.11%, to 12,226.99.
Stocks small and large dropped steeply into the red at about 1:30 p.m. ET, following news that bond insurer Ambac Financial Group, Inc. (NYSE: ABK) is planning on raising $1.5 billion in capital in order to keep its triple A rating. The Russell 2000 rebounded at about 2:45 p.m. ET.
The New York-based company, which is suffering the consequences of having guaranteed subprime-related debt, has been trying for months to raise money in order to maintain its rating. A downgrade will create problems for banks that hold over $500 billion in bonds insured by Ambac as some investors sell the debt while others reduce their holdings.
The bulls dominated the first half of the session on news that fourth-quarter productivity was revised up while the U.S. services sector contracted less than expected in February.
Among the winners is online search provider Local.com Corp. (Nasdaq: LOCM). The Irvine, Calif.-based company announced before the opening that its network has received over 5.7 million organic monthly unique visitors in February, an increase of about 14% from January’s 5 million visitors.
“Growing our organic traffic to over 50% of all traffic is a strategic objective for us,” said President Bruce Crair in a statement. “The investment we made during the second half of 2007 is paying off, with organic traffic reaching 37% of our total traffic, up from about 10% of all traffic a year ago.”
Elsewhere, shares of Northwest Pipe Co. (Nasdaq: NWPX) are up slightly following news after the close on Tuesday that the Portland, Ore.-based company saw its fourth-quarter earnings fall 7%.
Despite the result, CEO Brian Dunham expressed optimism about Northwest Pipe’s future.
“Our backlog was at a record-high level of $212 million as of the beginning of the year,” Dunham said on a conference call. “We expect the total market for 2008 to be a new record high for the company.”
Separately, media products and services company DivX Inc. (Nasdaq: DIVX) announced after the close on Tuesday that it authorized a repurchase of up to $20 million of its common stock.
