Small caps drop on credit worries
The Russell 2000 (NYSE: IWM) is plummeting on news of more fallout from the meltdown in the subprime mortgage sector.
At 10:22 a.m. ET, the small-cap index had lost 8.23 points, or 1.05%, to 772.67. The Dow Jones Industrial Average (INDU) was down 134.29 points, or 1.01%, to 13,132.
The bears are out in full force today following news before the opening that Wachovia Corp. (NYSE: WB) expects to suffer additional losses of $1.1 billion in the third quarter due to subprime mortgage-related debt. The Charlotte, N.C.-based bank, the fourth largest U.S. bank, said that it will write down collateralized debt obligations of about $1.11 per share for the month of October.
Wachovia also announced that it expects to see loan losses of over $500 million in parts of the country that have been most severely affected by the slump in the housing sector.
The news came as a nasty reminder that the subprime mess continues to ripple through the financial system.
In economic news, the U.S. Commerce Department reported that the trade deficit unexpectedly narrowed in September. The deficit came to $56.5 billion, the lowest level since May 2005 and a decline of 0.6% from $56.8 billion in August. A weak dollar and strong growth overseas helped exports grow more than imports.
The prices of U.S. exports rose 0.9% October from 0.3% in September, according to the Labor Department.
However, import prices rose 1.8% in October, above the projected increase of 1.3%. That’s a worrying sign that imports are contributing to inflation in the United States. Import prices added 0.8% in September.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• AMIS Holdings Inc. (AMIS), up 18% on news that third-quarter earnings beat expectations.
• Hutchinson Technology Inc. (HTCH), up 11% on news of a rise in fiscal fourth-quarter profit.
• Omega Financial Corp. (OMEF), up 13% on news it is being acquired by F.N.B. Corp. (FNB) for $393 million.
Biggest percentage losers:
• Jones Soda Co. (JSDA), down 17% on news of a third-quarter loss.
• Home Diagnostics Inc. (HDIX), down 20% on news that third-quarter revenue missed expectations.
• U.S. Auto Parts Network (PRTS) down 18%. A company representative could not be reached for comment.
