Russell 2000 leading the losers
The Russell 2000 (NYSE: IWM) is down sharply and the Dow is following on fears that the U.S. economy may be slowing down. At 2:25 p.m. the small-cap index had lost 7.23 points, or 0.91%, to 791.33. The Dow Jones Industrial Average (INDU) has shed 20.41 points, or 0.15%, to 13,215.72.
The slump in the U.S. housing sector could lead to broader economic problems, according to Angelo Mozilo, CEO of mortgage lender Countrywide Financial Corp. (NYSE: CFC). Appearing on CNBC television, Mozilo said that he believes the high level of delinquencies and foreclosures, combined with turmoil in the stock markets, will drag down the economy. Moreover, he said he does not think that the industry environment is improving.
The news spooked investors, who quickly turned bearish. The Dow slipped into negative territory just after 11 a.m. ET, while the Russell 2000 extended its losses.
Ironically, Calabasas, Calif.-based Countrywide, the nation’s biggest mortgage lender, got stocks off to good start with news that it has sold a $2 billion stake to Bank of America Corp. (NYSE: BAC). Mozilo said the deal, which was inked after Wednesday’s close and has since been approved by regulators, will put the company on strong footing. He strongly rebuked a recent analyst report that Countrywide is facing bankruptcy.
Elsewhere, the price of oil has added about $0.60 to $69.90 a barrel.
