Russell 2000 still hurting
The Russell 2000 (NYSE: IWM) is deep in negative territory on news of a steep decline in the U.S. services sector. At 1:20 p.m. ET, the small-cap index had retreated 13.35 points, or 1.85%, to 710.11. The Dow Jones Industrial Average (INDU) was off 277.36 points, or 2.20%, to 12,357.80.
The U.S. services sector suffered its biggest one-month decline in seven years in January, falling to a level of 41.9 from 54.4 in December. A reading above 50 indicates an expansion. Economists were expecting the measure to decline to 53.
Services comprise about 75% of U.S. gross domestic product and news of the contraction, the first since March 2003, led to fears of an economic recession.
The numbers tell us that the ripple of economic problems which originally started as a slump in house prices in the second half of 2006, and later spread to the financial sector and to consumers, has now spread even further.
Stocks small and large are falling, with makers of construction products and raw materials leading the way.
AuthenTec Inc. (Nasdaq: AUTH), which provides authentication technology, is down 3% to $13 despite news before the start of trading that it swung to a fourth-quarter profit and increased its revenue 67%.
Sunnyvale, Calif.-based flash memory solutions provider Spansion Inc. (Nasdaq: SPSN) has added 4% to $4.06 on news that it has been upgraded to “buy” from “hold” by Lazard Capital.
On the other hand, BluePhoenix Solutions Ltd. (Nasdaq: BPHX), an Israeli maker of enterprise IT solutions was downgraded by financial services firm Collins Stewart to “hold” from “buy” despite news of a $4 million contract with the government of the United Kingdom.
But the big loser is SiRF Technology Holdings, Inc. (Nasdaq: SIRF), a supplier of global positioning system semiconductor solutions, which got downgraded to “hold” from “buy” after it lowered its fiscal 2008 earnings estimate.
