Small cap losses deepen
The Russell 2000 (NYSE: IWM) and the Dow have added to their losses as credit fears grip Wall Street. At 3:06 p.m. ET, the small-cap index had dropped 20.32 points, or 2.99%, to 659.39. The Dow Jones Industrial Average (INDU) was missing 275.33 points, or 2.27%, to 11,870.41.
The sell-off has intensified as news of liquidity problems at Bear Stearns (NYSE: BSC) have spread fears of a widening credit squeeze. The investment bank reported shortly after the opening that its cash position deteriorated significantly over the past 24 hours.
The New York-based company turned to J.P. Morgan Chase & Co. (NYSE: JPM) and the New York Federal Reserve for short-term financing to alleviate its liquidity problems. Bear Stearns has been highly exposed to the meltdown in the subprime mortgage sector, first feeling pain last summer when two of its hedge funds went belly up due to bets made on securities backed by mortgages.
There’s speculation that Bear Stearns will cease to exist as an independent company and be bought out by one of its larger and more financially stable rivals.
Amidst the carnage on Wall Street, gold and silver companies are the only sector bucking and seeing shares move higher.
Small-cap Aurizon Mines Ltd. (AMEX: AZK), which has gold development activities in Quebec, is in the green.
Similarly, Richmont Mines Inc. (AMEX: RIC) also has its stock price appreciating. Going the opposite way are shares of Midway Gold Corp. (AMEX: MDW), which has gold and silver mineral properties in North America.
