Small caps fall on poor earnings
The Russell 2000 (NYSE:IWM) is falling as investors fear that corporate earnings will weaken in the face of economic problems.
At 10:08 a.m. ET, the small-cap index was down 3.73 points, or 0.52%, to 708.95. The Dow Jones Industrial Average had declined 65.87 points, or 0.52%, to 12,546.56.
The bears are in control on news after the close on Monday that New York-based aluminum producer Alcoa Inc. (NYSE:AA) saw its first-quarter profit decline more than expected due to higher energy costs and lower metal prices.
“Upstream margins were squeezed by higher energy costs and a weaker U.S. dollar, but the global market remains tight and prices are near historic highs, primarily driven by demand in Asia, especially China,” CEO Alain Belda said in a statement.
Similarly, chipmaker Advanced Micro Devices, Inc. (NYSE:AMD) reported before the opening that its first-quarter sales came in below analysts’ projections.
Wall Street is worried that corporate earnings will be negatively affected by the economic slowdown.
Shares of small-cap Secure Computing Corp. (Nasdaq:SCUR), which provides enterprise gateway security solutions, are sagging on news before the opening that the San Jose, Calif.-based company has lowered its first-quarter guidance.
Similarly, semiconductor company Integrated Silicon Solution, Inc. (Nasdaq:ISSI) announced before the start of trading that it expects second-quarter revenue to decline 3.3% from a year earlier. The stock is down more than 6%.
