Russell 2000 stumbles
The Russell 2000 (IWM) and the other major U.S. indices closed with a loss following economic and financial news. The small-cap index let go 7.04 points, or 0.96%, to 723.46. The Dow Jones Industrial Average (INDU) declined 108.03 points, or 0.85%, to 12,635.16.
On a year-to-date basis, the Russell 2000 has lost 5.88%, while the Dow has retreated 4.75% and the S&P 500 has shed 5.96%.
Stocks small and large interrupted two days of solid gains today as investors consolidated their positions and reacted to news of a wave of downgrades in the financial sector.
Trading began on a bearish note and the Russell 2000 spent the entire session in negative territory following news that UBS AG (NYSE: UBS) downgraded credit card issuer American Express Co. (NYSE: AXP) to “sell” from “buy.”
McLean, Va.-based rival Capital One Financial Corp. (NYSE: COF) suffered the same fate, its stock downgraded to “sell” from “neutral” due to the possibility of a consumer-led recession and a rise in unemployment. The same goes for Discover Financial Services (NYSE: DFS), another card issuer.
As if all that was not enough to cement the bears’ dominance, Moody’s Investor Services suggested that it may downgrade a wholly-owned unit of Charlotte, N.C.-based bank Wachovia Corp. (NYSE: WB).
In economic news, the U.S. Census Bureau reported after the start of trading that new orders for manufactured goods increased a less-than-expected 2.3% in December. That’s a rise of $10.1 billion to $441.6 billion.
The numbers represent the biggest jump since July but are below the 2.5% forecasted by economists. Factory orders increased an upwardly revised 1.7% in November.
Orders for durable goods, which are intended to last at least three years, jumped 5%, while orders for manufactured nondurable goods decreased 0.4%.
Nevertheless, the data tells us that the manufacturing sector is showing some life and continues to spend money on new equipment despite the housing slump and the pullback in consumer spending.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
• China Precision Steel, Inc. (CPSL), up 39% to $5.91.
• China Architectural Engineering, Inc. (RCH), up 24% to $7.66.
• Achillion Pharmaceuticals, Inc. (ACHN), up 23% to $6.60.
• Dollar Thrifty Automotive Group, Inc. (DTG), down 37% to $16.40 on news of a lowered 2007 earnings guidance.
• Coldwater Creek Inc. (CWTR), down 18% to $5.76 on news of an analyst downgrade.
• BankUnited Financial Corp. (BKUNA), down 16% to $6.71.
• Palm Inc. (PALM) 6,759,100 shares traded on news of an analyst upgrade.
• China Precision Steel, Inc. (CPSL) 6,289,600 shares traded.
• The Greenbrier Companies, Inc. (GBX) 5,235,400 shares traded on news of a possible merger with American Railcar Industries Inc. (ARII).
The day saw seven small-cap stocks set 52-week lows, while five small-caps established a 52-week high.
