Tag - Dfr

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are hurting as investors react to Bernanke’s testimony. At 1:19 p.m. ET, the small-cap index was down 8.62 points, or 1.23%, to 691.29. The Dow Jones Industrial Average (INDU) had dropped 125.51 points, or 1.01%, to 12,340.65.

“The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced,” U.S. Federal Reserve chairman Ben Bernanke told lawmakers on Capitol Hill today.

That spooked investors and small-cap stocks, which were already trading below the flat line, extended their declines.

The Fed chief painted a bleak picture of the current state of the U.S. economy, saying that labor market conditions in December were “disappointing” while investment in equipment and software has slowed.

What needs to be done?

“I agree that fiscal action could be helpful in principle,” Bernanke said. “Fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone.”

But he was careful not to endorse any specific stimulus package and emphasized that the measures should come into force quickly if they are to have a positive effect on the economy.

Bernanke did not talk much about the Fed’s policy meeting on Jan. 29 and 30, but hinted at a possible interest rate cut.

Deerfield Capital Corp. (NYSE: DFR) shares are climbing after it said it completed the acquisition of its external manager from Triarc Cos, a New York-based Arby’s restaurant franchisor.

Deerfield’s external manager, Deerfield & Co. LLC, is a fixed income asset manager. Triarc has been in the midst of a corporate restructuring in an effort to focus on its restaurant business.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are trading sideways on news of conflicting economic reports and credit worries.

At 10:48 a.m. ET the Russell 2000 was down 7.14 points, or 0.92%, to 768.98. The Dow had shed 52.44 points, or 0.40%, to 13,159.65.

An index of pending home resales surprisingly added 5% in June following a 3.7% decline in May, the National Association of Realtors reported after the opening bell.

That’s a sign that the U.S. housing sector may be stabilizing.

Separately, the Institute for Supply Management’s factory index dropped to 53.8 in June, below the forecast 55.5. The index stood at 56 in May. Still, a reading above 50 is a sign of expansion, suggesting that strong global economic growth is driving demand for U.S. manufactured goods.

The indices opened with brief gains but quickly slipped into negative territory following renewed concerns about loans and securities derived from home mortgages. Bear, Stearns & Co. Inc. (NYSE: BSC) triggered the selling after it said that it will prevent investors from pulling their money out of a troubled hedge fund that had bet on securities backed by subprime mortgages.

The following are the most actively traded company's with market capitalizations under $500 million: