Tag - Imb

Small-cap stocks endured another sizable decline Monday, pulled down by tension over the health of the financial arena at a time when the economy is already struggling with rising unemployment, slumping housing markets and soaring energy costs. The Russell 2000 (NYSE:IWM) shed 10.45, or 1.55%, to 664.50, the third lowest daily close since mid-March.

The closing slide in small caps was a stark difference from this morning as the market appeared poised to begin the week with a relief rally. Stock index futures jumped some 1.6% during overnight action as investors embraced a plan by government authorities to shore up the balance sheet — and market confidence — in government-sponsored mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). However, that overnight rally failed to gain traction relatively quickly once the market opened today, and a wave of selling swept through banking stocks, especially within the regional banking sector and smaller banks, which took a toll on small-cap index products. Despite opening up amid 20%-plus gains this morning, FNM and FRE eventually closed down 4.2% and 5.8%, respectively.

Elsewhere on the banking front, National City Corp. (NYSE:NCC) plunged 17% after trading was halted briefly on concerns about unusual trading activity. NCC was downgraded by analysts, and the stock dropped anchor, as the unsettling tide of selling coursed through financials a day after IndyMac Bancorp Inc. (NYSE:IMB) failed, becoming the third-largest U.S. bank failure on record.

There was some sense that investors are beginning to fret about all the special bail-out programs needed to avert systemic risk on the financial landscape. After all, there are only so many rabbits that magicians at the Federal Reserve and Treasury Department can pull out of their hats. What’s more, there are some concerns that these recovery efforts could flood the debt market with so much paper that supply issues could hamper funding, or even that the world could balk at “being the buyer of last resort for U.S. government debt,” as noted in a research report . . .

After opening higher on the government’s plan to ease going concerns surrounding Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), small caps came under pressure 30 minutes into the session and remain submerged midday, as apprehension concerning the financial sector took the forefront.

At 1:23 p.m. ET., the Russell 2000 (NYSE:IWM) skidded 11.29, or 1.67%, to 663.66, while the Dow lost 58.54, or 0.53%, to 11,042.

In an effort to restore confidence in the nation’s largest mortgage insurers Fannie Mae and Freddie Mac, the U.S. Treasury and the Federal Reserve devised a plan over the weekend in which an increase in a treasury line of credit would be extended temporarily. Additionally, as part of the plan the Fed would take on a consultant role. After both mortgage giants saw their share prices lopped off by some 45% last week, midday, Fannie shares were off a slight 2.44% midday, while Freddie stock has reversed course to slip 4.65%. 

However, the plan constructed to pacify an otherwise panicked market soon gave way to concerns about the government’s ability to battle further financial debacles. Investors worry how many potentially more innovative or practical backstops the government has up its sleeve. 

The plan comes on the heels of IndyMac’s (NYSE:IMB) failure on Friday. IndyMac was repossessed by the federal regulators after one of the largest thrift/mortgage banks failed to cover a run by depositors, becoming the third largest banking failure in U.S. history.

In corporate news, the nation’s largest brewer Anheuser-Busch Co. (NYSE:BUD) said that it will embrace a takeover from Belgian brewer InBev NV for approximately $52 billion, one of the few positive market indicators of the day. Merger activity typically creates bullish momentum among investors, as seen in the wake of the booming deal days of 2007. If there are deals in the making among large caps, . . .

Small-cap stocks dipped into the red about 30 minutes after opening solidly higher, pulled down by ongoing jitters in the financial arena despite hope stirred by a Treasury Department plan to help shore up troubled government-sponsored mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). At 10:00 a.m. ET, the Russell 2000 (NYSE:IWM) was down 3.73, or 0.55%, at 671.22.

The rescue proposal for GSEs was a scenario that reminded many investors of the stock market bottom that accompanied the bailout of Bear Stearns. There was a hope among many that the government would ensure the health of FNM and FRE, a calming influence in the wake of last week’s failure at IndyMac (NYSE:IMB), which became the third largest banking failure in U.S. history when the bank could not cover a run by depositors. Shortly after the open, FNM shares were up 22%, while FRE stock was up 17%. The advance in GSEs was expected to provide a lift to the overall financial sector, but that wasn’t playing out in early trading today.

Anheuser-Busch Co. (NYSE:BUD) announced that it would embrace a takeover from Belgian brewer InBev NV for approximately $52 billion, which is yet another large M&A deal put together in recent days. Merger activity typically creates bullish momentum among investors, and if there are deals to be done in large caps, then there are also bargains to be found in the small-cap arena. BUD shares were up only 1.2% shortly after the open as this takeover has been in the news and priced into the stock for weeks now.

The overnight bounce in U.S. equities pulled the greenback along for the ride, halting a dramatic slide in the buck that hit a crescendo late last week as the GSE crisis spiked. Shortly after the open, the dollar was up 0.2% against the yen, and almost . . .

Small-cap stocks were expected to jump higher on the opening, lifted by a government rescue plan for embattled mortgage lending giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) and by a large acquisition of iconic American brewer Anheuser-Busch Co. (NYSE:BUD). The Russell 2000 (NYSE:IWM) was up over 1% in overnight trading, which suggests an opening near 682.

The Treasury Department this weekend announced plans to temporarily increase credit to the government-sponsored credit firms (GSEs) in addition to other measures to ensure the health of FNM and FRE. As a result, stock in the two firms rallied aggressively overnight, and the move appeared to calm stock markets, which also were climbing ahead of the regular stock market open.

Still, the failure late last week of IndyMac (NYSE:IMB) and the freefall in GSE stocks underscores the precarious position right now for the banking system. IMB’s failure ranks as the 3rd largest in history.

In addition to the GSE rescue plan, investors were heartened this morning by the announcement of an acquisition of Budweiser by Belgian firm InBev NV for . . .

IndyMac Bancorp Inc. (NYSE:IMB) is sinking more than 43% ahead of today’s opening bell, after the holding company announced late in the trading day Monday it would stop new loans. The Pasadena, Calif.-based company also said it will cut about 3,800 jobs, affecting more than half of its workforce. The mortgage lender is feeling the pressures of a weak economy and a housing market that has been crumbling for months. Shares of the stock are down more than 88% since January.

Ahead of today’s opening bell, shares of IndyMac Bancorp are at $0.42, down $0.32 from Monday’s close. During the past year, IndyMac shares have ranged from $0.56 to $31.32.

Small-cap shares opened higher Monday, lifted by advances in overseas equity markets, a firm U.S. dollar and a dip in crude oil prices. At 9:55 a.m. ET, the Russell 2000 (NYSE:IWM) was up 0.86, or 0.12%, at 720.91.

The U.S. dollar was up nearly 1% against the yen into the market open, and pushed about 0.2% higher versus the euro. The firm dollar tone was linked to a $2-per-barrel pullback in crude oil futures, which came off Friday’s record highs amid profit-taking.

Financial shares could find a boost this morning from a jump in the largest European bank HSBC, which climbed about 2% overnight on profit news. Early on this morning, Citigroup (NYSE:C) was up 0.6% and Bank of America (NYSE:BAC) was up about 0.8%. Other large-caps of note included Wal-Mart (NYSE:WMT), which was up 1.2% shortly after the opening on optimism ahead of earnings. Research in Motion (Nasdaq:RIMM) jumped 2.4% on news that the company was unveiling a new BlackBerry Bold Smartphone.

A massive earthquake in China overnight caught trader attention, but a lack of details seemed to leave the market without a feeling for whether or not it would have an impact on equities in the United States.

Looking ahead to this week’s action, the economic calendar picks up steam after a relatively tame risk quotient last week. Not only will the market have to navigate through a batch of important data on retail sales, inflation and housing starts, but there is a glut of Federal Reserve speakers on the docket.

Speaking of Fed speakers, Chicago Fed President Charles Evans was the first one up to the plate this morning, saying that housing was still a drag on the economy, and that growth risks were to the downside, but inflation risk was on the upside. He said that U.S. growth should improve in the second half of the year, but . . .

The Russell 2000 (NYSE: IWM) closed in the green following news that Warren Buffet has offered to help bond insurers. The small-cap index advanced 5.73 points, or 0.82%, to 705.48. The Dow Jones Industrial Average (INDU) added 133.40 points, or 1.09%, to 12,373.41.

On a year-to-date basis, the Russell 2000 has declined 7.90%, while the Dow has retreated 6.72% and the S&P 500 has lost 8.14%.

The bulls completely dominated trading today as small-cap stocks opened higher and stayed positive throughout the session following news that billionaire investor Warren Buffett has offered to have his company, Berkshire Hathaway, assume responsibility for $800 billion of municipal bonds guaranteed by bond insurers MBIA Inc. (NYSE: MBI), Ambac Financial Group Inc. (NYSE: ABK) and Financial Guaranty Insurance Co.

There have been concerns recently that the three companies could be downgraded due to write-downs from insuring subprime debt. The bond insurers would welcome relief for their entire portfolio, but Buffett is only offering help for their relatively safe municipal bond holdings.

Nevertheless, investors were in a buying mood, which was also bolstered by news that ailing carmaker General Motors Corp. (NYSE: GM) swung to a fourth-quarter net loss that was not as severe as analysts had forecasted.

Also helping the bulls was news after the start of trading that St. Louis Federal Reserve Bank President William Poole thinks the U.S. economy will likely avoid recession.

Small-cap stocks touched their peak of the session at about 2 p.m. ET before easing to their close level.

Here are the day’s biggest percentage gainers and losers, along with top volume leaders, among companies with a market cap between $100 million and $750 million:

The Russell 2000 (IWM) fell as comments from Fed officials stating that inflation remains a concern erased early gains. The small-cap index fell 9.09 points, or 1.30%, to 692.49, its third consecutive decline. The Dow Jones Industrial Average (INDU) lost 65.03 points, or 0.53%, to 12,200.10.

On a year-to-date basis, the Russell 2000 has decreased 9.60%, while the Dow has let go 8.03% and the S&P 500 is missing 9.66%.

“It will be necessary to continue to monitor inflation developments carefully,” Philadelphia Federal Reserve Bank President Charles Plosser said in a speech to the Birmingham Rotary Club this afternoon. “With inflation creeping up, we have to be particularly alert for rising inflation expectations.”

Similarly, Richmond Federal Reserve Bank President Jeffrey Lacker told an audience at Marshall University’s Lewis College of Business that the risks of a recession have recently increased while inflation has not moderated as some expected, according to news reports.

Higher inflation makes it difficult for the U.S. Federal Reserve to boost the economy with cuts to the target federal funds rate for fear that lower interest rates could drive inflation even higher.

The Russell 2000 (IWM) and the other major U.S. indices lost big today as news of a steep decline in the services sector led to recession fears. The small-cap index let go 21.88 points, or 3.02%, to 701.58. The Dow Jones Industrial Average (INDU) was off 370.03 points, or 2.93%, to 12,265.13.

On a year-to-date basis, the Russell 2000 has shed 8.41%, while the Dow has retreated 7.54% and the S&P 500 has shed 8.97%.

The bears ran the show today as news of an unexpectedly deep drop in U.S. services in January sparked a sell-off.

The Institute for Supply Management said that its index of non-manufacturing dropped to 41.9 in January from 54.4 in December. The result is far worse than the one expected by economists. A reading above 50 is a sign of growth.

Services comprise about 75% of U.S. gross domestic product and a decline would surely throw off an economy already beset with a slump in the housing sector, a credit squeeze and a pullback of consumer spending into recession.

Or maybe a recession has already started.

Either way, investors reacted to news of the biggest one-month decline in services in seven years by selling everything in sight. The makers of construction and raw materials suffered the most, follower by insurance companies and those manufacturing agricultural machinery. No single group of stocks posted a gain.

Separately, Banc of America Securities contributed to the bearish mood when it downgraded Yahoo! Inc. (Nasdaq: YHOO) to “neutral” from “buy.”

The Russell 2000 was trending down during the entire session, skidding to its lowest level at the close.

Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Quadra Realty Trust, Inc. (QRR), up 33% on news that it might be acquired by Hypo Real Estate Holdings AG.
• Meritage Homes Corp. (MTH), up 19% despite news of a fourth-quarter net loss.
• IndyMac Bancorp, Inc. (IMB), up 16%.

Biggest percentage losers:

• Municipal Mortgage & Equity, LLC (MMA), down 45% on news it has cut its dividend.
• LECG Corp. (XPRT), down 33% on news preliminary fourth-quarter results are below the company’s previous guidance.
• ICU Medical, Inc. (ICUI), down 17% on news of a decline in fourth-quarter profit.

The Russell 2000 (NYSE: IWM) was the only major U.S. index to gain today as investors digested economic news. The small-cap index added 2.48 points, or 0.36%, to 699.91. The Dow Jones Industrial Average (INDU) fell 34.95 points, or 0.28%, to 12,466.16.

On a year-to-date basis, the Russell 2000 is down 8.63%, while the Dow has retreated 6.02% and the S&P 500 has trimmed 6.48%.

Small-cap stocks made sharp moves in both directions but spent the second half of trading in positive territory and managed to close with a small gain despite a late-session sell-off.

The day began with news of a report from the U.S. Labor Department that consumer prices rose 0.3% in December. That’s above economists’ projected increase of 0.2% but below November’s 0.8% jump.

That means that total inflation in 2007 inflation was 4.1%, the highest rate since 1990.

However, December core inflation, which excludes food and energy, was 0.2%, following an increase of 0.3% in November.

Core inflation for all of 2007 was 2.4%, which is slightly above the U.S. Federal Reserve’s preferred range between 1% and 2%.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices rallied and ended the day in the green on news that the Fed may move to lower interest rates. The small-cap index added 8.09 points, or 1.14%, to 720.21, its second consecutive rise. The Dow Jones Industrial Average (INDU) advanced 117.78 points, or 0.92%, to 12,853.09.

On a year-to-date basis, the Russell 2000 has retreated 5.98%, while the Dow is down 3.10% and the S&P 500 has shed 3.27%.

Stocks small and large began the day in negative territory but rallied in the second half of the session and closed with solid gains.

“In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary,” U.S. Federal Reserve chairman Ben Bernanke told an audience at the Women in Housing and Finance and Exchequer Club this afternoon.

Those words sparked speculation that the Fed is preparing to lower the federal funds rate at its two-day meeting starting Jan. 29. The bulls took charge of the session and pushed stocks higher.

The federal funds rate, the rate at which commercial banks make overnight loans to each other, currently stands at 4.25%.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting gains on news of a possible interest rate cut. At 2:46 p.m. ET, the small-cap index had advanced 7.49 points, or 1.05%, to 719.61. The Dow Jones Industrial Average (INDU) was up 135.59 points, or 1.06%, to 12,870.90.

“In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary,” U.S. Federal Reserve chairman Ben Bernanke told an audience at the Women in Housing and Finance and Exchequer Club this afternoon.

Those comments sent stocks rising and fueled speculation that the Fed is considering lowering the federal funds rate. But the bullish mood did not last and within an hour small-cap stocks were back down to their starting level.

Blame the bearish mood on the uncertain economic environment.

The day began with news from U.S. retailers that December sales were weak, suggesting that consumer spending is slowing. That would be a negative development, since consumption is about 70% of gross domestic product.

Economic growth is already being weighed down by the slump in the housing sector and higher energy costs.

The Russell 2000 (NYSE: IWM) posted gains today as some of the world’s most influential central banks announced a plan to ease the credit squeeze. The small-cap index rose 5.44 points, or 0.71%, to 771.71. The Dow Jones Industrial Average (INDU) advanced 41.13 points, or 0.31%, to 13,473.90.

On a year-to-date basis, the Russell 2000 is down 2%, while the Dow has added 8.01% and the S&P 500 has climbed 4.94%.

The bulls ran the show today as investors cheered news that the U.S. Federal Reserve and four other major central banks will inject billions into global money markets to boost bank lending.

The Fed will allow depository institutions to receive billions in short-term funds at rates below the ones it normally charges for loans. Similar initiatives were announced by the central banks of Canada, England, Switzerland and the European Union.

The Fed also set that it has created “swap” lines with the European Central Bank and the Swiss National Bank, for $20 billion and $4 billion respectively. That allows the two banks to make dollar loans in their jurisdictions. Previously, foreign central banks were unable to inject funds in anything other than their own currency.

The Russell 2000 (NYSE: IWM) fell today on news that reminded investors of the fallout from the subprime mortgage mess. The small-cap index retreated 7.91 points, or 1.04%, to 752.06. The Dow Jones Industrial Average (INDU) was off 65.84 points, or 0.49%, to 13,248.73.

On a year-to-date basis, the Russell 2000 has dropped 4.49%, while the Dow has advanced 6.21% and the S&P 500 has gained 3.26%.

Only the bears showed up today following news that financial services giant JPMorgan Chase & Co. (NYSE: JPM) downgraded fellow industry players Bear Stearns (NYSE: BSC), Goldman Sachs Group, Inc. (NYSE: GS) and Lehman Brothers Holdings Inc. (NYSE: LEH) to “sell” from “market perform.”

The news spooked investors who worried that a stagnating U.S. housing market could continue to plague banks and financial institutions and cause more economic malaise, possibly even triggering a recession.

All three New York-based financial services companies had invested in securities backed by subprime mortgages and took a hit during the third-quarter, declaring billions in write-downs on mortgage and other credit assets.

Economists worry that the ongoing slump in the U.S. housing sector and a credit squeeze will combine to significantly drag down U.S. economic growth in the fourth quarter of 2007 and into 2008.

The Russell 2000 index and the Dow are in positive territory following news that U.S. personal incomes and consumer spending both grew in May, albeit less than expected.

At 10:08 a.m. ET the Russell 2000 had added 5.84 points, or 0.70 percent, to 844.87. Dow Jones Industrial Average was up 90.96 points, or 0.68 percent, to 13,513.24.

Personal income rose at a rate of 0.5% in May, the U.S. Commerce Department said before the opening. Economists were looking for a rise of 0.6%. Personal income fell 0.2% in April.

Consumer spending added 0.5% in May, below the forecast rise of 0.7%.

Investors’ upbeat attitude is probably mostly due to news that the price index for personal consumption expenditures, a key inflation indicator, rose just 0.5% in May. The so-called “core” index, which excludes food and energy, added a miniscule 0.1% in May, and only 1.9% from a year earlier.