Small caps decline further

Alex Alexandrov | Mar 04, 2008 12:01pm EST | Comment

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The Russell 2000 (NYSE: IWM) and the other major U.S. indices have sunk deeper into negative territory.

At 12:00 p.m. ET, the small-cap index had declined 11.39 points, or 1.66%, to 672.83. The Dow Jones Industrial Average (INDU) had shed 177.88 points, or 1.45%, to 12,081.02.

The bears are out following worrying news from major corporate players. Chip maker Intel Corp. (Nasdaq: INTC) announced after the close on Monday that it has lowered its first-quarter gross margin forecast to 54% from 56% earlier due to lower-than-expected prices for some flash memory chips.

Elsewhere, Citigroup Inc. (NYSE: C) reported before the opening that it may have to cut as many as 30,000 jobs over the next year and a half due to writedowns related to the subprime mortgage mess. Additionally, the New York-based bank might need to raise more capital to get over the current rough patch.

Speaking to the Independent Community Bankers of America, U.S. Federal Reserve chairman Ben Bernanke called on mortgage lenders to help financially stretched borrowers avoid default.

Small-cap stocks have extended their slide with shares of coal energy companies leading the way down. Colorado Springs, Colo.-based Westmoreland Coal Co. (AMEX: WLB) is falling, as is James River Coal Co. (Nasdaq: JRCC), which reported before the opening that it suffered a fourth-quarter loss of $18.5 million, or $1.04 per share. Analysts were projecting a loss of $0.64 per share.

Meanwhile, Austin-based Perficient Inc. (Nasdaq: PRFT) is in the red despite starting the session in the green on news before the start of trading that fourth-quarter profit soared 63% to $4.5 million, or $0.15 per share, compared with $2.8 million, or $0.10 per share, a year earlier. The IT consulting firm also reported that during the last three-month period it opened a development center in China and resource recruiting plant in India.

Bucking the negative trend on Wall Street is America’s Car-Mart, Inc. (Nasdaq: CRMT). Shares of the Bentonville, Ark.-based automotive retailer are higher on news that fiscal third-quarter profit outpaced expectations due to an 18.7% rise in same-store revenue.