Russell 2000 tumbling
The Russell 2000 (NYSE: IWM) is falling on news of a weak regional manufacturing index. At 1:11 p.m. ET, the small-cap index had dropped 7.08 points, or 1%, to 702.94. The Dow Jones Industrial Average (INDU) was down 106.08 points, or 0.85%, to 12,321.18.
The Philadelphia Federal Reserve’s regional index of manufacturing conditions fell to -24 in February from a reading of -20.9 in January, according to an announcement after the start of trading.
Economists were expecting to see a slight increase from the level in January, which was the lowest reading since 2001. A reading above zero indicates an expansion.
The future general activity index turned sharply negative, declining to -16.9 from 5.2 in January.
The numbers point to economic weakness and again raised fears of a recession.
Small-cap stocks quickly erased all of their earlier gains and dropped to the flat line shortly before 11 a.m. ET. The Russell 2000 stayed level until 12 p.m. ET, when the bears gained control.
Among the biggest losers is new and used vehicles retailer Lithia Motors, Inc. (NYSE: LAD), which saw its shares sputter on news of a first-quarter and 2008 outlook below analysts’ projections.
Similarly, Diamond Foods, Inc. (Nasdaq: DMND), which distributes nuts and snack products, left investors with a sour taste in their mouths when it said that fiscal year 2008 revenue will be lower than previously expected.
On the flip side, shares of Furniture Brands International, Inc. (NYSE: FBN) are rising on news that Sun Capital Securities Group LLC is interested in buying the St. Louis, Mo.-based residential furniture company. Sun Capital already owns a 9.4% stake.
