Small caps plunge
The Russell 2000 (NYSE: IWM) and the other U.S. indices are falling hard on news of poor corporate earnings and mixed economic reports.
At 10:29 a.m. ET, the small-cap index had lost 20.94 points, or 2.53%, to 807.08. The Dow Jones Industrial Average (INDU) was down 224.36 points, or 1.61%, to 13,705.65.
Stocks suffered a steep drop out of the gate following news that Exxon Mobil Corp. (NYSE: XOM) reported a bigger-than-expected drop in third-quarter profit and missed Wall Street’s expectations.
The world’s largest publicly traded oil company announced a net income of $1.70 per share, down from $1.77 per share a year earlier and below analysts’ projected earnings of $1.75 per share.
Contributing to the overwhelmingly bearish sentiment was news that Citigroup Inc. (NYSE: C) was downgraded to “sector underperform” from “sector perform” by investment bank CIBC World Markets. CIBC said that Citigroup might have to cut its dividend or sell assets in order to raise more than $30 billion to shore up its capital.
In economic news, the U.S. Commerce Department reported that personal income increased at a seasonally adjusted rate of 0.4% in September, compared with a rise of 0.3% in August. That’s in line with economists’ expectations.
However, personal consumption in September increased 0.3%, below the projected rise of 0.4%. In August, personal consumption added a downwardly revised 0.5%.
A price index for personal consumption expenditures, a measure of inflation, added 0.2% in September after staying put in August. The core PCE, which excludes the more volatile costs of food and energy, also gained 0.2%.
On a year-to-date basis the PCE has added 2.4%, which is above the U.S. Federal Reserve’s target range of between 1% and 2%. In August the year-to-date PCE was 1.8%.
Meanwhile, initial jobless claims for the week ended Oct. 27 fell 6,000 to 327,000 on a seasonally-adjusted basis. That’s a larger drop than the one expected by economists, but on the other hand, the four-week average—which is a more stable measure—increased 1,750 last week to 327,000.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Spreadtrum Communications Inc. (SPRD), up 14% on news of a rise in third-quarter profit.
• PharmaNet Development Group Inc. (PDGI), up 13% on news of a rise in third-quarter profit.
• PDF Solutions Inc. (PDFS), up 15% on news of an increase in third-quarter revenue.
Biggest percentage losers:
• Smith Micro Software Inc. (SMSI), down 29% on news of an analyst downgrade.
• Vanda Pharmaceuticals Inc. (VNDA), down 25% on news it plans to offer $100 million of convertible senior notes due 2014.
• China Precision Steel Inc. (CPSL) down 23% on news it has agreed to issue and sell an aggregate of 7,100,000 shares of its common stock.
