Small caps still suffering
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are languishing deep in negative territory. At 1:55 p.m. ET, the small-cap index had dropped 15.93 points, or 2.24%, to 696.55. The Dow Jones Industrial Average (INDU) was down 229.81 points, or 1.80%, to 12,548.34.
The mood on Wall Street remains bearish following disappointing news from the financial sector and the U.S. economy.
The negative tone was set before the start of trading when Citigroup Inc. (NYSE: C) announced that it swung to a fourth-quarter loss of $9.83 billion, or $1.99 per share, compared with a profit of $5.13 billion, or $1.03 per share, a year earlier.
That’s the biggest loss in the nearly 200-year history of the New York-based bank. Citigroup also reported that it is cutting over 4,000 jobs and has incurred $18.1 billion in pretax write-downs and credit costs.
In the face of such abysmal numbers, Citigroup turned for help to the governments of Singapore and Kuwait, as well as one of its former chairman and a member of the royal family of Saudi Arabia. The investors are chipping in with a cash infusion of $14.5 billion.
Today’s leading economic news is also bearish and fueling more worries of a looming recession.
The U.S. Census Bureau reported before opening that retail sales in December fell 0.4%, while economists were expecting to see a modest increase of 0.1%. Sales for November were revised down to a gain of 1% from an initially reported 1.2%.
Purchases excluding automobiles also posted a decline of 0.4%, while economists were projecting a rise of 0.1%.
The data pretty much guarantees that the U.S. Federal Reserve will move to lower the federal funds rate when it begins a two-day meeting on Jan. 29. The federal funds rate, the rate at which commercial banks make overnight loans to each other, now stands at 4.25%.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Ocwen Financial Corp. (OCN), up 55% on news the company has received a takeover bid to go private for $7 a share.
• Lifecore Biomedical, Inc. (LCBM), up 30% on news it will be acquired by private equity firm Warburg Pincus for about $239 million.
• Vignette Corp. (VIGN), up 20% on news of strong fourth-quarter preliminary results.
Biggest percentage losers:
• MoneyGram International, Inc. (MGI), down 49% on news it has received a cash infusion from an investment firm.
• Hibbett Sports Inc. (HIBB), down 19% on news it has lowered its fourth-quarter earnings outlook.
• Town Sports International Holdings, Inc. (CLUB), down 19% on news its COO has left the company.
