Small caps drop on economic worries
The Russell 2000 (NYSE: IWM) lost ground and fell more than the other major U.S. indices as economic concerns brought out the bears. The small-cap index declined 10.72 points, or 1.50%, to 705.72. The Dow Jones Industrial Average (INDU) shed 112.10 points, or 0.88%, to 12,582.18.
On a year-to-date basis, the Russell 2000 has retreated 7.87%, while the Dow is down 5.15% and the S&P 500 has let go 6.86%.
Fourth-quarter economic growth was as slow as initially projected, an inflation gauge moved up, and some small banks might not survive the subprime meltdown, according to today’s economic news.
Small-cap stocks fell out of the gate on news that the U.S. Commerce Department reaffirmed its initial estimate for fourth-quarter economic growth of 0.6% at an annual rate, disappointing economists expecting an upward revision to 0.8%.
The same report showed that an index measuring the prices paid by U.S. residents increased 3.9%, above the initial estimate of 3.8%.
Separately, the U.S. Labor Department said that jobless claims for the week ended Feb. 23 were 373,000, a larger-than-expected increase from the preceding week’s upwardly revised level of 354,000.
“The jobless claims number is consistent with a softening labor market,” said Arun Raha, vice president of Economic Research and Consulting for the North American operations of reinsurance company Swiss Re, in an email. “The probability that the U.S. economy goes into recession in the next 12 months remains elevated at 55%.”
The Russell 2000 spent the entire session in the red, bottoming out at around 11:45 a.m. ET, when the index fell to a level of about 704.
Bucking the trend was industrial technology company Hurco Companies, Inc. (Nasdaq: HURC), which saw its shares jump 33% on news that first-quarter profit rose 44%.
Elsewhere, U.S. Federal Reserve chairman Ben Bernanke told the Senate Banking Committee that small regional banks that have invested in real estate could fail.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
• Hurco Companies, Inc. (HURC), up 33% to $48.15.
• Keryx Biopharmaceuticals, Inc. (KERX), up 20% to $6.14.
• VisionChina Media Inc. (VISN), up 15% to $10.60 on news that fourth-quarter sales more than quadrupled.s
• R.H. Donnelley Corp. (RHD), down 48% to $9.34 on news of a poor first-quarter outlook.
• Origin Agritech Ltd. (SEED), down 31% to $6.64 on news of a loss for fiscal 2007.
• PharmaNet Development Group Inc. (PDGI), down 31% to $28.62 on news of disappointing profit guidance.
• R.H. Donnelley Corp. (RHD) 21,362,600 shares traded.
• PharmaNet Development Group Inc. (PDGI) 8,405,100 shares traded.
• CollaGenex Pharmaceuticals, Inc. (CGPI) 5,102,300 shares traded.
The day saw 45 small-cap stocks set 52-week lows, while 12 small caps established a 52-week high.
