Small caps open lower
The Russell 2000 (NYSE: IWM) began the session in the red amid speculation of future interest rate cuts.
At 10:03 a.m. ET, the small-cap index was down 1.16 points, or 0.18%, to 658.95. The Dow Jones Industrial Average (INDU) had declined 2.85 points, or 0.02%, to 11,890.84.
The U.S. Federal Reserve will drop its target federal funds rate to 2% by late April, according to a report by investment bank The Goldman Sachs Group, Inc. (NYSE: GS) before the start of trading.
An analyst with the New York-based company thinks the Fed will lower its target interest rate 0.5% during its next two regularly scheduled meetings, the first of which is on March 18. However, the report claims that an emergency rate cut as early as Monday can’t be ruled out.
The federal funds rate, the rate commercial banks charge each other for overnight loans, currently stands at 3%.
Small-cap stocks are falling, with CRA International Inc. (Nasdaq: CRAI) among the biggest losers. The Boston, Mass.-based consulting services firm reported before the opening that it expects first-quarter revenue to be below Wall Street’s projections.
Shares of Hi-Tech Pharmacal Co., Inc. (Nasdaq: HITK) are also falling following news before the start of trading that the maker of nutritional products has swung to a fiscal third-quarter net loss of $1.5 million, or $0.14 per share, compared with a net income of $0.7 million, or $0.06 per share, a year earlier.
Bucking the bearish trend is AEP Industries Inc. (Nasdaq: AEPI). The South Hackensack, N.J.-based manufacturer of plastic packaging films announced before the opening that net sales rose 14% in the first quarter of fiscal 2008 to $205 million, compared with $179.3 million during the first three months of fiscal 2007.
