Russell shaken by Bhutto death
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) fell throughout Thursday’s trading session on weaker-than-expected durable goods orders and lackluster financial firm news, magnifying investors’ already present concerns surrounding a possible economic slowdown. The small-cap index dropped 23.52 points, or 2.95%, to 773.51. The Dow shed 192.08 points, or 1.42%, to 13,359.61.
News of the assassination of former Pakistani Prime Minister Benazir Bhutto only added to the unsettling economic data, shaking the markets.
Durable goods orders for the month of November edged up a less-than-forecasted 0.1% from October’s 0.4% decline. Economists were forecasting an increase of 2.5%.
In corporate news, Goldman Sachs issued a note late Wednesday speculating that financial juggernaut Citigroup Inc. (NYSE: C) might have to slash its dividend by 40% in light of now greater-than-forecasted write-downs for bad bets on collateralized debt obligations. Goldman is now projecting write-downs in the neighborhood of $18.7 billion, up from the investment bank’s previous estimate of $11 billion.
In related news surrounding the unfolding of the credit crisis, Fitch Ratings put 205 residential mortgage-backed securities backed by bond insurers, including MBIA and Ambac Financial Group, on review for a downgrade.
The day’s negative news overshadowed U.S. consumer confidence, which rose unexpectedly in December. The Conference Board's index of confidence increased to 88.6, the first gain in five months, from a revised 87.8 the prior month. November's number was the lowest in two years.
Bhutto’s assassination, added to energy trader’s worries concerning instability in the Middle East, caused a sharp rise in crude oil prices. Additionally, energy traders are also anticipating the release of weekly data that are expected to show a decline in U.S. crude inventory. A barrel of crude oil shot up $1.38 to $97.35 in mid-day trading.
The day’s news caused investors to take shelter in safe havens pushing up gold prices and pushing Treasury-bond yields lower. The 10-year note’s yield stood at 4.22% mid-day, while gold traded up $4 to $833.70 per February contract.
Biggest percentage gainers:
• American Dental Partners, Inc. (ADPI), up 75.4% to $9.68 on news that it settled a lawsuit with PDG, a Minnesota-based doctor group.
• Document Sciences Corp. (DOCX), up 75.2% to $14.43 on news that EMC Corp. will buy the company for about $85 million.
• Energy Focus, Inc. (EFOI), up 33.3% to $6.85 after the lighting products maker announced three new products.
Biggest percentage losers:
• PRIMEDIA Inc. (PRM) down 15.6% to $8.47.
• Crystal River Capital Inc. (CRZ), down 14.5% to $14.75.
• Gevity HR, Inc. (GVHR), down 14.1% to $7.68.
Volume leaders:
• China Sunergy Co., Ltd. (CSUN), 21.02 million shares traded after trading above a resistance level on Wednesday.
• American Dental Partners, Inc. (ADPI), 10.86 million shares traded on news that it settled a lawsuit with PDG, a Minnesota-based doctor group.
• Evergreen Solar, Inc. (ESLR), 10.74 million shares traded after breaking a resistance level and powered by general enthusiasm among a group of solar stocks.
