Small caps falling again
The Russell 2000 (NYSE:IWM) is firmly in the red after briefly moving into positive territory. At 2:29 p.m. ET, the small-cap index was down 3.07 points, or 0.44%, to 699.04. The Dow Jones Industrial Average (INDU) was down 49.90 points, or 0.40%, to 12,372.96.
Small-cap stocks are again declining after spending about 30 minutes above the flat line shortly before 1 p.m. ET.
The catalyst appears to be news that Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, has made remarks suggesting that the U.S. economy is slipping into recession.
“It’s clear the economy is in a slowdown that resembles past periods that were the leading edge of a recession,” Lockhart told the Rotary Club of Chattanooga, Tenn. “Following a sluggish fourth quarter, I expect that GDP for the first quarter of this year will show little, if any, growth.”
Before the start of trading the U.S. Commerce Department reported that gross domestic product increased at the previously announced annual pace of 0.6% in the last three months of 2007, matching economists’ projections. That’s significantly lower than the 4.9% growth recorded in the third quarter of 2007.
Economic growth during the entire 2007 year was 2.2%, the slowest in five years.
With equities sagging, shares of companies providing security systems and services are the worst performing industry group. The stock of small-cap LoJack Corp. (Nasdaq:LOJN), which provides technology for the tracking and recovery of mobile assets, is down.
Shares of financial services companies are the next worst performing industry group. Dallas-based Penson Worldwide, Inc. (Nasdaq:PNSN), which provides securities and futures processing infrastructure products and services, is seeing its stock decline 3%.
Meanwhile, small-cap securities and banking firm SWS Group Inc. (NYSE:SWS) is also among the losers.
