Small caps open with a tumble

Alex Alexandrov | Mar 06, 2008 10:12am EST | Comment

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The Russell 2000 (NYSE: IWM) and the Dow are falling on news of more fallout from the subprime mess.

At 10:13 a.m. ET, the small-cap index was down 6.04 points, or 0.88%, to 677.70. The Dow Jones Industrial Average (INDU) had shed 103.47 points, or 0.84%, to 12,151.52.

Stocks opened in the red following news that investment company Carlyle Capital Corp. Ltd, which invests in fixed income asset classes and residential mortgage-backed securities, has failed to meet margin calls on its portfolio.

Carlyle Capital announced before the start of trading that it has received a notice of default from one of the banks that helps finance its portfolio of mortgage securities and expects to receive one more.

Similarly, Thornburg Mortgage Inc. (NYSE: TMA), a residential mortgage lender which buys investments in adjustable-rate and variable-rate mortgage assets, reported after the close on Wednesday that it has failed to meet a margin call of about $28 million.

Among the biggest losers this morning is Union Drilling, Inc. (Nasdaq: UDRL). Shares of the contract land drilling services and equipment provider have dropped following news before the start of trading that the Fort Worth, Texas-based company’s fourth-quarter net earnings fell more than 50%.

Elsewhere, USA Mobility Inc. (Nasdaq: USMO), which provides wireless communications solutions, reported after the close on Wednesday that it swung to a fourth-quarter loss due to a decline in revenues and higher tax expenses. Shares are down more than 10%.