Russell 2000 tumbles
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) failed to hold mid-morning gains and slipped into negative territory, as investors’ concerns about weak job reports sent stocks plunging. Before the opening, the Labor Department reported that payrolls plunged a greater-than-expected 63,000 in February, heightening recession fears and causing gyrations early in the session.
The Russell 2000 shed 0.40%, or 2.67 points, to 660.11. The Dow Jones Industrial Average lost 1.22%, or 146.7 points, to 11,893.69.
Economists were forecasting an increase in payrolls of 25,000 for February. Today’s data come on the heels of a larger-than-anticipated decline in payrolls in January of 17,000.
The unemployment rate was essentially unchanged at 4.8%, compared with 4.9% in January. Economists were projecting the unemployment rate to edge up to 5%.
Average hourly earnings rose by $0.05, or 0.3%, over the month, according to the Labor Department.
The Federal Reserve’s statement this morning that it will increase the amount of loans it makes to banks failed to calm concerns and buoy the market. Specifically, the central bank augmented auctions of four-week funds to banks to $50 billion from its original $30 billion planned for March 10 and March 24. The Fed also said it will avail an additional $100 billion through repurchase agreements.
In a statement, Fed officials also stipulated that the central bank will continue auctions for at least six months, and would increase the size of such auctions further if needed.
Despite the worst job news in five years, retail reigned as the leading sector for the day.
“[Thursday] was a real poor number for all retailers, so basically it’s some bargain hunting and some bottom-fishing and also some smart people probably closing out some short positions,” said Eric Beder, retail analyst at Brean Murray, & Carret & Co. “It’s not a major trend. When you look at combined today and yesterday it’s significantly down. It’s basically just sort of a dead cat bounce here.”
In small-cap news, PeopleSupport, Inc. (Nasdaq: PSPT), a provider of offshore business process outsourcing services, fell today after Piper Jaffray and RBC Capital Markets downgraded the stock to “neutral” and “sector perform” from “buy” and “outperform,” respectively.
The downgrades came as the small cap issued first-quarter and full-year guidance below the consensus on Wall Street, as the company remains under pressure from a weakening economy.
Susquehanna Financial analyst Samuel Saunders also prefers to remain on the sidelines regarding PeopleSupport. “While the operating environment is becoming more challenging and call volumes are under pressure due to the weakening economy, recent M&A overtures and a potentially aggressive buyback program could put a floor on the stock,” the analyst wrote in a research note today.
Shares of AngioDynamics (Nasdaq: ANGO) also swooned after the medical devices provider reported this morning that it expects to report third-quarter sales results below the consensus on Wall Street.
Coal energy was the top sector loser during Friday’s trading session. Among small caps, Westmoreland Coal Company (AMEX: WLB) shares were following the lead of larger coal companies in a sector decline.
The capital goods sector, specifically construction and agriculture machinery, was also on the decline. Among small caps, shares of Gehl Co. (Nasdaq: GEHL) closed in the red.
Biggest percentage gainers:
• Orbitz Worldwide, Inc. (NYSE: OWW) up 17.8% to $5.77 after Lehman Brothers maintained its “overweight” rating on the stock.
• Crystal River Capital, Inc. (NYSE: CRZ), up 15.6% to $10 after the specialty finance company reported it swung to a fourth-quarter loss.
• The Ensign Group, Inc. (Nasdaq: ENSG), up 15% to $8.65 after the provider of rehabilitative care services declared a quarterly dividend of $0.04 per share and its fourth-quarter profit rose on a year-over-year basis.
Biggest percentage losers:
• AngioDynamics, Inc. (Nasdaq: ANGO), down 37.5% to $9.99 after the provider of medical devices lowered its 2008 sales guidance.
• Reddy Ice Holdings, Inc. (NYSE: FRZ), down 37.3% to $14.49 after the packaged ice distributor and manufacturer reported that the Department of Justice searched its corporate headquarters in association with an antitrust investigation.
• PeopleSupport, Inc. (Nasdaq: PSPT), down 28.1% to $8.20 after the business process outsourcer was downgraded by Piper Jaffray and the firm said the weak U.S. economy could hurt its first quarter.
Volume leaders:
• Anworth Mortgage Asset Corp. (NYSE: ANH) 8,471,100 shares traded.
• PNM Resources, Inc. (NYSE: PNM) 7,564,000 shares traded.
• Capstead Mortgage Corp. (NYSE: CMO) 6,624,400 shares traded.
