Small caps stumble
The Russell 2000 (NYSE: IWM) is falling on news of a rise in weekly U.S. jobless claims and despite higher-than-expected third-quarter economic growth.
At 10:43 a.m. ET, the small-cap index was missing 2.73 points, or 0.35%, to 767.31. The Dow Jones Industrial Average (INDU) was down 22.35 points, or 0.17%, to 13,267.10.
The U.S. economy grew at an impressive 4.9% annual rate during the third quarter of 2007, the Commerce Department reported before the opening. That’s an upward revision from the preliminary figure of 3.9%.
Economists were expecting a slightly more modest upward adjustment to a rate of 4.8%.
The fast rate of growth was largely due to a surge in exports, which rose 18.9% instead of the initially reported
16.2%. Imports increased 4.3%, while the preliminary numbers had forecasted a rise of 5.2%.
However, consumer spending increased a less-than-expected 2.7%, a sign that American consumers are getting tired in the face of stagnating home prices and high energy costs. Consumption is about 70% of gross domestic product.
Residential fixed investment, which includes housing, fell 19.7%, reflecting the ongoing slump in the housing sector.
Despite the economy’s strong third-quarter performance, the highest quarterly pace since 2003, a sharp slowdown is still in the cards.
The U.S. Labor Department reported before the start of trading that jobless claims for the week ended Nov. 24 rose 23,000 to 352,000, the highest number since February. The revised figure for a week earlier is 329,000.
A sharp rise in jobless claims could be a sign of a coming economic slowdown.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• Solarfun Power Holdings Co. Ltd. (SOLF), up 30% on news of a rise in third-quarter profit.
• TiVo Inc. (TIVO), up 16% on news of a narrower third-quarter loss.
• BIDZ.com, Inc. (BIDZ), up 14% on news the company is considering suing an editor who published a derogatory article.
Biggest percentage losers:
• American Woodmark Corp. (AMWD), down 17% on news it cut its full-year profit and sales targets.
• The Cato Corp. (CTR) down 17% on news of a decline in third-quarter profit.
• Citizens Inc. (CIA), down 15% on news it will sell 2,682,857 shares of its Class A common stock to institutional investors for about $18.8 million.
About the Author
Reporter Alex Alexandrov is based in SmallCapInvestor.com's Washington, D.C. bureau.
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