Small caps head south
Stocks opened higher Wednesday, just one day after suffering steep losses tied to ongoing investor concerns about the economy, but quickly turned south ahead of President Obama’s $75 billion mortgage relief plan release.
At 10:27 am ET, the Russell 2000 (NYSE:IWM) is down 5.31, or 1.24%, to 423.59. The Dow and S&P 500 are faring slightly better, but are still in the red, down 0.48% and 0.60%, respectively.
President Obama’s signing of the $787 billion economic stimulus bill into law on Wednesday did little to bolster market sentiment, but there is hope that his $75 billion mortgage relief plan, to be unveiled this afternoon, will buoy the stock market to higher waters. A main cause of the recession has been steep declines in housing prices and sales coupled with rising foreclosures; a solid housing plan out of the Obama administration may be seen as welcoming news to investors.
Before the bell, the Commerce Department reported that construction of new homes and apartments fell to a record low annual rate of 466,000 in January — a 16.8% drop compared with analyst predictions of a mere 5% drop. Analysts were forecasting an annual rate of 530,000 units from 550,000 units in December.
General Motors (NYSE:GM) and Chrysler submitted their proposal late Tuesday to the U.S. Treasury, asking for a combined $22 billion more in emergency loans to keep the automakers from going bankrupt. GM shares were essentially flat in morning trading.
Small caps seeing double-digit gains so far today include LoJack Corporation (Nasdaq:LOJN), which was up 20% after the security system company released a 2009 forecast that topped analysts’ estimates. NewStar Financial (Nasdaq:NEWS) is 14% higher after reporting a rise in Q4 profits, and medical equipment manufacturer Volcano Corporation (Nasdaq:VOLC) is up 12% after turning to a profit in Q4 and guiding above estimates.
