Small caps lower as homebuilder, retailers, autos slide
Small-cap stocks turned lower into mid-session trading, unable to sustain a mild morning rise as ongoing worries about the economy came back to the forefront following dreadful data on home sales. As expected, homebuilders were among the hardest hit stocks so far today, with retailers, banks and auto manufacturers also acting as a drag on the market. At 12:49 p.m. ET, the Russell 2000 (NYSE:IWM) was down 7.79, or 1.64%, at 467.28.
Existing home sales, which account for the overwhelming majority of activity, plunged 8.6% to an annual rate of 4.49 million units, far below the projection of 4.93 million units. What’s more, the price on homes tumbled 13.2%, the biggest percentage decline in 40 years. The ISE Homebuilders Index tumbled 3%, outpacing the overall market slide by a wide margin. Among small-cap homebuilders, Centex Corp. (NYSE:CTX) was off 4.1%; KB Home (NYSE:KBH) was down 3%; and Lennar Corp. (NYSE:LEN) was down 4%.
The worst performers so far today have been the automakers, with General Motors Corp. (NYSE:GM) down 15% and Ford Motor Co. (NYSE:F) off 16% following news that their credit ratings were slashed. The PHLX Retail Index was down 1% at midday, while the S&P Retail Index was off about 0.5%. Big department stores were among the worst sector groups today, with Macy’s Inc. (NYSE:M) sinking 5.5%.
The ongoing fretting about the economy pulled down crude oil prices, which slipped below $39 a barrel, off about 3.7% at midday. Energy shares weren’t as weak as the cash market, but were still down about 0.9%, with oil and gas drillers among the weaker performers.
Financial shares were holding up reasonably well, but banks were a noticeable source of strain in the financial arena. The KBW Banking Index was off about 1.6%, with Citigroup Inc. (NYSE:C) down 3.4% and Bank of America Corp. (NYSE:BAC) down 4.2%.
The top performing sector groups today included industrial real estate investment trusts, health care facilities, aluminum companies, Internet retail stocks and hotels.
Individual small caps on the move included K-V Pharmaceutical Co. (NYSE:KV.A), which tumbled 39% to fresh 52-week lows. Jones Apparel Group Inc. (NYSE:JNY) was off 16% adding to the sizable decline incurred Monday. AsiaInfo Holdings Inc. (Nasdaq:ASIA) was down 17% as the telecom software firm announced filings to offer stock. On the upside, Scopus Video Networks Ltd. (Nasdaq:SCOP) jumped 40%, gapping higher on unusually heavy volume on news that the digital video networking firm would be purchased by Harmonic Inc. (Nasdaq:HLIT) for $5.62 a share in cash.
