Small caps continue in the red
The Russell 2000 (NYSE: IWM) is firmly in negative territory midway through the session. At 1:49 p.m. ET, the small-cap index was down 14.59 points, or 2.13%, to 669.15. The Dow Jones Industrial Average (INDU) had lost 120.89 points, or 0.99%, to 12,134.10.
The bears are running the show on news that residential mortgage lender Thornburg Mortgage Inc. (NYSE: TMA) and investment company Carlyle Capital Corp. Ltd., which has made residential mortgage-backed securities, have failed to meet margins calls.
A “margin call” is when banks call in their loans to investors, who are in turn forced to sell off assets to raise cash, leading to a reduction in the price of those assets and more margin calls and losses.
Separately, a report by the U.S. Labor Department before the start of trading showed that jobless claims for the week ended March 1 fell 24,000 to 351,000, from an upwardly revised 375,000 the preceding week. Economists were expecting to see a smaller decline.
However, the number of people receiving unemployment benefits increased 29,000 to 2.83 million, the highest level in two years.
With stocks small and large falling, shares of airline companies are leading the way down.
Among small-cap airlines, Indianapolis-based Republic Airways Holdings Inc. (Nasdaq: RJET) is flying at a lower altitude.
Similarly, shares of AirTran Holdings, Inc. (NYSE: AAI) are descending despite news before the opening that the Orlando, Fla.-based company has launched new nonstop flights between Puerto Rico and both Orlando and Atlanta.
Elsewhere, Smith Micro Software, Inc. (Nasdaq: SMSI) is among the winners following news after the close on Wednesday reported fourth-quarter revenues of $20 million, a 16% increase compared with $17.2 million during the
last three months of 2006.
Looking ahead, the Aliso Viejo, Calif.-based developer of wireless communications software products and services is projecting full-year 2008 revenues of between $95 million and $105 million.
“We think almost all of the company’s businesses are doing very well and should improve in 2008 and beyond, leading to the conclusion that this is one of our top stock picks,” wrote Eric Kainer, an analyst with investment bank ThinkEquity Partners, in a research note today. Kainer has a “buy” rating on the stock and has set a price target of $21 a share.
