Small caps falling
The Russell 2000 (NYSE: IWM) is falling following news of a quarterly loss at Merrill Lynch and a decline in existing home sales.
At 10:55 a.m. ET, the small-cap index had lost 18.28 points, or 2.23%, to 800.25. The Dow Jones Industrial Average (INDU) was down 137.63 points, or 1.01%, to 13,538.60.
New York-based Merrill Lynch & Co Inc. (NYSE: MER) announced before the opening that it suffered its first quarterly loss in six years due to $7.9 billion in write-downs, primarily due to bets made on mortgages and leveraged loans.
Merrill Lynch reported a third-quarter net loss of $2.24 billion, or $2.82 per share, far worse than its forecast on Oct. 5 of a loss of up to $0.50 per share. Wall Street was expecting a loss of $0.45 per share.
That’s a sign that the contagion from the meltdown in the subprime mortgage sector remains active and capable of spreading shockwaves through the financial system. Chairman and CEO Stan O’Neal admitted that Merrill Lynch took a hit because it was too exposed to subprime, according to news reports.
Contributing to the bearish mood is news that U.S. sales of existing homes fell 8% in September, according to the National Association of Realtors. That’s an annual pace of 5.04 million, the lowest since NAR began keeping statistics in 1999.
The slump in the housing sector, which began in the second half of 2006 and shows no signs of letting up, has resulted in a wave of foreclosures and turmoil in the subprime mortgage sector.
Turning now to foreign stock exchanges, London’s FTSE 100 added 0.4% while in Frankfurt the DAX 30 Index shed 0.1%. In Asia, Japan’s Nikkei 225 slipped 0.6%.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Transmeta Corp. (TMTA), up 222% on news it has settled a lawsuit with Intel Corp.
• Citizens Inc. (CIA), up 10%.
• Vocus Inc. (VOCS), up 9% on news of an increase in third-quarter revenue.
Biggest percentage losers:
• Hythiam Inc. (HYTM), down 21%.
• Wavecom S.A. (WVCM), down 14% on news of a decline in third-quarter revenue.
• AMIS Holdings Inc. (AMIS), down 14% on news of a decline in third-quarter revenue.
