Small caps open with a jump
The Russell 2000 (NYSE:IWM) is rallying as news of more bank writedowns has investors hoping the end is in sight.
At 10:02 a.m. ET, the small-cap index had added 11.74 points, or 1.71%, to 699.71. The Dow Jones Industrial Average was up 233.27 points, or 1.90%, to 12,496.16.
Stocks small and large opened strong on news that Swiss banking giant UBS AG (NYSE:UBS) has announced a $19 billion writedown stemming from the subprime mortgage mess, while Deutsche Bank AG has suffered a writedown of nearly $4 billion.
However, investors are taking that as a bullish sign because the UBS will receive help from four other banks, an indication that it will get through the current rough patch. Overnight, shares of most of Europe’s major banks rose on optimism that the worst of the credit crunch is over.
Not surprisingly, shares of banks are currently the best-performing industry group. Among the winners is small-cap Heartland Financial USA, Inc. (Nasdaq:HTLF), which provides community banking services in seven states.
Similarly, Lansing, Mich.-based Capitol Bancorp Ltd. (NYSE:CBC) is also seeing its stock appreciate.
