Russell closes in the red; Dow falls to 6-year low

Stocks slid in the final hour of trading, finally capsizing at closing on news that tech bellwether Hewlett-Packard (NYSE:HP) is scaling back its 2009 forecast.

The Russell 2000 (NYSE:IWM) tumbled 6.47, or 1.53%, to 416.71, while the S&P 500 toppled 1.2% to 778.94, and the Dow fell 89 points, or 1.19%, to 7,466 — the lowest level since 2002. The Dow had dropped as low as 7,447.55 during the session.

Thursday started off on poor footing, with back to back economic data releases that solidified the state of the current economic climate. Before the opening the Labor Department released a report of initial jobless benefit claims, did little to inspire investor confidence that the employment situation in the United States was getting any better. The number of Americans filing new claims for unemployment held steady last week at 627,000, versus forecasts for a drop to 620,000, but the number of Americans continuing to file jobless claims rose to a record of nearly 5 million.

Also out before the opening was monthly data on wholesale prices, which increased more than expected last month, due in part to higher energy costs. The Producer Price Index rose 0.8% after falling 1.9% in December; economists predicted it would rise 0.3%. The Philadelphia Fed index, a reading on manufacturing, fell to minus 41.3 from minus 24.3 in January. Economists thought it would dip to minus 25; it was the lowest reading since 1990, according to High Frequency Economics.

Large-cap Hewlett-Packard was the biggest decliner on the Dow today after the hardware and software maker missed sales expecations and cut its full-year profit outlook.

"We think this could be a blow to investor sentiment," wrote J.P. Morgan analyst Mark Moskowitz in a note.

In other market news, Treasury prices slid as investors sought safety in government debt. The dollar was mixed versus other major currencies. Oil prices spiked 14%, while gold prices dipped a slight 0.33% to $975 per ounce.

Today’s small-cap percentage gainers include Exactech, Inc. (Nasdaq:EXAC), which surged 20% on solid fourth-quarter and full-year 2008 financial results. Also flying high was RC2 Corporation (Nasdaq:RCRC), up 25% after being upgraded to “buy,” and Dress Barn, Inc. (Nasdaq:DRBN), which saw a nice 11% rise after the retailer’s CEO commented that same-store sales were up so far for 2009.

On the downside, LDK Solar Co. (NYSE:LDK) tumbled 22% on a weak Q4 forecast. CryoLife, Inc. (NYSE:CRY) plummeted 23% after its Q4 profit missed the Street’s estimates and it forecasted a lower 2009 EPS. NutriSystem Inc. (Nasdaq:NITRI) fell over 11% after swinging to a Q4 loss and declining to issue full-year guidance.

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