Small caps stumble on Wachovia loss
The Russell 2000 (NYSE:IWM) closed lower on news that Wachovia Corp. (NYSE:WB) suffered a first-quarter loss. The small-cap index fell 2.09 points, or 0.30%, to 686.07. The Dow Jones Industrial Average declined 23.36 points, or 0.19%, to 12,302.06.
On a year-to-date basis, the Russell 2000 has shed 10.44%, while the Dow is off 7.26% and the S&P 500 is down 9.54%.
The bears and the bulls tangled but the bears were eventually victorious as investors reacted to news before the opening that Wachovia Corp. (NYSE:WB) swung to a first-quarter loss and will sell common and preferred stock to raise capital.
The Charlotte, N.C.-based bank has been relatively less exposed to the subprime mortgage mess than the other major financial institutions, leading to speculation that more players will report losses.
Banks were among the worst hit industry groups today. Among those who saw their stock price decline was small-cap multi-bank holding company GB&T Bancshares, Inc. (Nasdaq:GBTB).
Similarly, shares of Blairsville, Ga.-based United Community Banks, Inc. (Nasdaq:UCBI) fell 2%, while Crescent Banking Co. (Nasdaq:CSNT) dropped 20%.
Stocks small and large fell out of the gate but the losses were tempered by news before the opening that retail sales rose 0.2% in March, according to the U.S. Census Bureau. However, the increase was largely due to a 1.1% jump in sales at gasoline stations. Purchases excluding gasoline fell 0.3%.
Elsewhere, shares of Star Bulk Carriers Corp. (Nasdaq:SBLK) gained 3%.
“Star Bulk is our favorite idea in the maritime space for 2008,” wrote Kevin Sterling, an analyst with investment bank Stephens Inc., in a research note published today. Sterling reiterated his “overweight (volatile)” rating on the Greek shipping company’s stock and raised his price target to $19 per share from $18 per share.
The Russell 2000 spent most of the morning in the red but moved higher in the afternoon, only to sag again in the final hour of trading.
Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:
• Clayton Holdings, Inc. (Nasdaq:CLAY), up 19% to $5.72 on news it will be purchased by private-equity firm Greenfield Partners LLC for about $134 million.
• Quixote Corp. (Nasdaq:QUIX), up 15% to $12.19.
• Natural Gas Services Group, Inc. (AMEX:NGS), up 14% to $28.74.
• Babcock & Brown Air Ltd. (NYSE:FLY), down 18% to $10.99.
• FirstFed Financial Corp. (NYSE:FED), down 13% to $17.08.
• Cardica Inc. (Nasdaq:CRDC), down 12% to $7.25.
Volume leaders:
• EMCORE Corp. (Nasdaq:EMKR) 3,748,900 shares traded.
• Pier 1 Imports, Inc. (NYSE:PIR) 3,422,200 shares traded.
• Brigham Exploration Co. (Nasdaq:BEXP) 3,311,900 shares traded.
The day saw 76 small-cap stocks set 52-week lows, while six small caps established a 52-week high.
