Russell 2000 most bearish
The Russell 2000 (NYSE: IWM) has declined more than the other major U.S. indices on news of an imminent downgrade of bond insurers.
At 11:46 a.m. ET, the small-cap index was down 8.11 points, or 1.16%, to 688.17. The Dow Jones Industrial Average (INDU) had lost 70.09 points, or 0.57%, to 12,214.21.
Wall Street is firmly in negative territory following news that rating agencies Moody’s, Standard & Poor’s and Fitch will move to downgrade major bond insurers MBIA Inc. (NYSE: MBI) and Ambac Financial Group, Inc. (NYSE: ABK).
Bond insurers guarantee bonds purchased by investors by agreeing to pay interest and principle if the issuer doesn’t do so. The insurers’ triple-A rating is a seal of approval for investors looking for safe investments.
A downgrade of MBIA and Ambac will create problems for banks that hold bonds they insure, possibly leading to billions in writedowns.
Among small-cap stocks, shares of trucking and transportation companies are among the worst performers.
Patriot Transportation Holding, Inc. (Nasdaq: PATR), whose trucks operate in the Southeastern United States, has shifted into lower gear.
Similarly, shares of general commodities transporter USA Truck, Inc. (Nasdaq: USAK) have also slowed down. Chattanooga, Tenn.-based Covenant Transportation Group, Inc. (Nasdaq: CVTI) is also tapping on the breaks.
Elsewhere, portable storage solutions provider Mobile Mini, Inc. (Nasdaq: MINI) has agreed to buy Mobile Services Group for about $701.5 million.
