Sudden drop for Russell 2000
An abrupt late-session reversal pushed down the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU), wiping out strong gains that came despite weak retail sales. The small-cap index lost 10.21 points, or 1.21%, to 834.98. The Dow tumbled 63.57 points, or 0.45%, to 14,015.12.
On a year-to-date basis, the Russell 2000 is up 6%, while the Dow has advanced 12.4%.Small caps were on track for a strong close and the Dow was in record territory until about 2 p.m. ET, when an abrupt turnout erased all gains and resulted in steep losses.
There appear to be a number of factors that combined to push equities off the cliff.
Financial services giant JPMorgan Chase & Co. (NYSE: JPM) announced staff reductions due to the lower volume of leveraged finance and structured credit, while also lowering its sales estimate for Chinese search engine Baidu—a move that resulted in a decline of major U.S. tech stocks.
Meanwhile, Countrywide Financial Corp. (NYSE: CFC) announced that September mortgage lending tumbled a stunning 44.3% from a year earlier due to tighter lending standards and the ongoing housing slump.
Trading got off to a bullish start following news that Wal-Mart Stores Inc. (NYSE: WMT) raised its third-quarter profit outlook.
Positive news from the world’s largest retailer overshadowed generally weak same-store results for September. Retailers blamed the warm weather, which made it difficult to sell cold-weather items.
Among small-cap retailers, Gottschalks Inc. (NYSE: GOT) and department store chain The Bon-Ton Stores, Inc. (Nasdaq: BONT) reported same-store sales declines of 3.9% and 6.5%, respectively. Electronics retailer Sharper Image Corp. (Nasdaq: SHRP) suffered a steep drop in total September sales, while women’s fashion chain Cache Inc. (Nasdaq: CACH) bucked the trend.
In economic news, jobless claims for the week ended Oct. 6 fell declined more than expected, indicating that the labor market remains tight.
Elsewhere, August U.S. exports increased 0.4% to $138.34 billion, while imports fell 0.4% to $195.92 billion. Consequently, the trade deficit contracted 2.4% to $57.59 billion in August, the lowest level in about five years. The trade deficit was $59 billion in July.
Here are today’s biggest percentage gainers and losers, along with volume leaders, among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• City Telecom Ltd. (CTEL), up 105% to $10.75. A company representative could not be reached for comment.
• Helicos BioSciences Corp. (HLCS), up 29% to $11.25.
• LJ International Inc. (JADE), up 27% to $6.15. A company representative could not be reached for comment.
Biggest percentage losers:
• E-Z-EM, Inc. (EZEM), down 21% to $15.65 due to news of a first-quarter profit decline.
• China Shenghuo Pharmaceutical Holdings, Inc. (KUN), down 14% to $11.88.
• ZipRealty Inc. (ZIPR), down 14% to $5.70 on news it is cutting its full year revenue expectations.
Volume leaders:
• Origin Agritech Ltd. (SEED) 26,863,400 shares traded.
• LJ International Inc. (JADE) 15,340,000 shares traded.
• Shengdatech Inc. (SDTH) 7,151,300 shares traded.
