Small caps aching
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are falling on news that U.S. home builder confidence remains low. At 2:58 p.m. ET, the small-cap index was down 10.06 points, or 1.33%, to 743.87. The Dow Jones Industrial Average (INDU) had retreated 159.08 points, or 1.19%, to 13,180.77.
The bears have been running the show today, ever since Citigroup Inc. (NYSE: C) announced before the start of trading that it has lowered its ratings on nine U.S. banks. The New York-based company, the largest U.S. bank, said that it expects those banks to see more losses stemming from the purchase of securities backed by subprime mortgage loans.
The financial sector has been bleeding in the wake of the meltdown in the subprime sector, which started this summer. Home prices began to stagnate in the second half of 2006, leading to a wave of foreclosures and delinquencies as cash-strapped borrowers were unable to pay their mortgages.
Speaking of the housing sector, the picture remains dire.
Builder confidence in the market for new single-family homes remained at a record low for a third consecutive month in December, according to the National Association of Homebuilders after the start of trading.
The NAHB/Wells Fargo Housing Market Index stayed at 19 this month, its lowest level since the measure was introduced in 1985. Readings below 50 indicate that more builders view market conditions as poor rather than favorable.
“Today’s report shows that builders’ views of housing market conditions haven’t changed in the past several months, and there clearly are signs of stabilization,” said NAHB chief economist David Seiders.
“Many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity – most likely by the second half of 2008.”
Elsewhere, the price of oil has fallen $0.57 to $90.70 a barrel on news that the oil minister of Algeria said that Organization of the Petroleum Exporting Countries could decide to increase output when it next meets in February. OPEC controls about 40% of the world’s oil production.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• IBT Bancorp, Inc. (IRW), up 45% on news that it will be acquired by S&T Bancorp Inc. (SBTA).
• KongZhong Corp. (KONG), up 19% on news of improved fourth-quarter revenue guidance.
• Cost Plus, Inc. (CPWM), up 14% on news a Danish entrepreneur bought a stake in the company.
Biggest percentage losers:
• Esmark Inc. (ESMK), down 21% on news that it will not be able to purchase a steel mill from industry giant Mittal Steel Co.
• Force Protection, Inc. (FRPT) down 21%.
• American Dairy, Inc. (ADY) down 20% on news of a negative article about the company.
