Small caps open lower
The Russell 2000 (NYSE: IWM) is in negative territory despite news of an unexpectedly strong rise in consumer spending.
At 10:10 a.m. ET, the small-cap index had declined 8.95 points, or 1.27%, to 696.77. The Dow Jones Industrial Average (INDU) was down 179.26 points, or 1.42%, to 12,402.92.
The U.S. Commerce Department reported before the start of trading that spending increased 0.4% in January, while personal income added 0.3%. Economists were expecting smaller increases of 0.2%.
The same report showed that the price index for personal consumption expenditures rose 0.4%, while the core index, which excludes the costs of food and energy, climbed 0.3%.
That makes a year-over-year increase of 3.7%, while the core index is at 2.2%. The U.S. Federal Reserve prefers the annual core index to stay within the range of between 1% and 2%.
The good news on consumption, though, was overshadowed by news that insurance giant American International Group, Inc. (NYSE: AIG) suffered the biggest quarterly loss in its history, largely due to losses related to subprime mortgages.
Small-cap stocks are falling fast, with shares of Big 5 Sporting Goods Corp. (Nasdaq: BGFV) among the biggest losers. The El Segundo, Calif.-based sporting goods retailer reported after the close on Thursday that it expects first-quarter earnings between $0.17 per share and $0.23 per share, below Wall Street’s consensus view of $0.24 per share.
Elsewhere, Immersion Corp. (Nasdaq: IMMR) announced after the close on Thursday that it swung to a fourth-quarter profit of $0.5 million, or $0.02 per share, compared to a loss of $1.98 million, or $0.08 per share, a year earlier.
But the result has not impressed investors. Shares of the San Jose, Calif.-based company, which makes technology allowing people to more fully use their sense of touch when operating digital equipment, are down more than 15%.
Myers Industries, Inc. (NYSE: MYE), which makes polymer products, reported before the opening that net sales for the fourth quarter increased 20% to $232.8 million, while net income jumped 149% to $18.2 million, or $0.52 per share. Nevertheless, the company’s stock is in the red.
