Small caps seeing red
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting declines following more economic and financial news.
At 10:26 a.m. ET, the small-cap index had lost 3.08 points, or 0.44%, to 694.35. The Dow Jones Industrial Average (INDU) was down 36.90 points, or 0.30%, to 12,464.21.
Stocks small and large opened in the red but quickly recovered some of their losses, with the Russell 2000 even briefly visiting positive territory before declining again.
Grabbing the headlines is JPMorgan Chase & Co. (NYSE: JPM), which reported that fourth-quarter net income declined to below analysts’ expectations due to about $1.3 billion in writedowns for subprime-mortgage investments.
However, revenue outpaced Wall Street’s projections.
The New-York-based banking heavyweight also said that credit card spending slowed in December, a worrying sign that Americans might be cutting back on their spending.
In economic news, the U.S. Labor Department reported before the start of trading that consumer prices rose 0.3% in December. That’s above economists’ projected increase of 0.2% but below November’s 0.8% jump.
However, for all of 2007 inflation has added 4.1%, the highest rate since 1990.
December core inflation, which excludes food and energy, was 0.2%, following an increase of 0.3% in November. The slowdown was due to smaller increases in the price of apparel, medical care, recreation and new vehicles.
For all of 2007, core inflation was 2.4%, which is slightly above the U.S. Federal Reserve’s preferred range between 1% and 2%.
Nevertheless, the December slowdown in inflation tells us that the Fed can lower its target interest rate without risking a jump in inflation. Chairman Ben Bernanke has hinted that the U.S. central bank will lower the federal funds rate, which currently stands at 4.25%, during its next two-day meeting at the end of January.
Investors will also be awaiting the release of the U.S. Federal Reserve’s “beige book” — a survey of regional economic indicators — which is scheduled at 2 p.m. ET.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• VistaCare, Inc. (VSTA), up 20% on news it will be acquired by Odyssey HealthCare Inc. (ODSY) for about $147.1 million.
• Albany Molecular Research, Inc. (AMRI), up 8%.
• M/I Homes, Inc. (MHO), up 5%.
Biggest percentage losers:
• PFF Bancorp, Inc. (PFB), down 23% on news that it expects a provision for loan and lease losses in the third quarter
• Stereotaxis, Inc. (STXS), down 22% on news of fourth-quarter guidance below expectations.
• California Pizza Kitchen, Inc. (CPKI), down 17% on news it has lowered its fourth-quarter guidance.
