Russell 2000 still hurting
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are still well below the flat line on negative news from corporate heavyweights. At 2:01 p.m. ET, the small-cap index had dropped 25.55 points, or 3.9%, to 802.47. The Dow Jones Industrial Average (INDU) had lost 264.27 points, or 1.9%, to 13,665.74.
The day began with sharp declines on news that Exxon Mobil Corp. (NYSE: XOM) reported a bigger-than-expected drop in third-quarter profit and missed Wall Street’s expectations, while Citigroup Inc. (NYSE: C) was downgraded to “sector underperform” from “sector perform” by investment bank CIBC World Markets over concerns that it might have to cut its dividend to raise more than $30 billion to shore up its capital.
Stocks dove so sharply that trading curbs were introduced to prevent a massive sell-off.
The overwhelmingly bearish mood is also due to investors’ realizations that an additional cut in the target interest rate is unlikely during the remainder of 2007.
On Wednesday the U.S. Federal Reserve lowered the federal funds rate to 4.5% from 4.75% but made no reference about the possibility of future action.
In economic news, the U.S. Commerce Department reported before the opening that the price index for personal consumption expenditures, a measure of inflation, added 0.2% in September after staying put in August. The core PCE, which excludes the more volatile costs of food and energy, also gained 0.2%.
On a year-to-date basis the PCE has added 2.4%, which is above the U.S. Federal Reserve’s target range of between 1% and 2%. In August the year-to-date PCE was 1.8%.
Meanwhile, U.S. manufacturing growth slowed in October, according to the Institute for Supply Management. The trade group said after the start of trading that its manufacturing index fell to 50.9 from 52.0 in September. A level above 50 indicates an expansion.
Elsewhere, the price of oil has eased $1.16 to $93.37.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Spreadtrum Communications Inc. (SPRD), up 19% on news of a rise in third-quarter profit.
• CryoLife Inc. (CRY), up 13% up on news of an improved third-quarter.
• Flanders Corp. (FLDR), up 15% despite news of a third-quarter loss.
Biggest percentage losers:
•Smith Micro Software Inc. (SMSI), down 28% on news of an analyst downgrade.
• General Communication Inc. (GNCMA) down 26% on news of a third-quarter loss.
• Vanda Pharmaceuticals Inc. (VNDA), down 25% on news it plans to offer $100 million of convertible senior notes due 2014.
