Numbing claims data, overseas losses to spark opening slide

Small-cap stocks are expected to open lower, following yet another decline in stock markets around the world overnight and by a startling rise in unemployment claims in the U.S. Further weakness could be tied to a slide in crude oil prices and further investor flight out of stocks and into credit instruments. It should be noted however, that the market is oversold, Libor rates were lower and Swiss central bankers cut rates, which could help limit early losses. Stock index futures were down about 1.5% in after-hours trade, which suggests a Russell 2000 (NYSE:IWM) open near 407.00.

The weekly claims report came in at 542,000, the highest level in 16 years, which was way above the forecast of 503,000. Still on tap this morning will be the Philly Fed Survey and leading indicators reports, both slated for release at 10:00 a.m. ET.

Around the world, the global stock index was off 2% overnight at 5-1/2 year lows and European shares were down about 2.5% heading toward the U.S. open, as banking shares in Europe caught up with the rout in Citigroup Inc. (NYSE:C) from Wednesday.

Crude oil prices were down nearly $3 a barrel at 22-month lows, sparking a decline in not just energy stocks, but other commodity names as well in overseas trading. Copper prices were off about 3% overnight as signs of global economic weakening take a toll on that growth sensitive market. Japan reported that exports to its Asian partners fell for the first time in six years, further evidence of slowing outside of developed nations in the Asia region.

The chart picture for small caps looks predictably awful. There is a little support zone around the 412 level, but that zone appears to be at near-certain immediate risk on the opening. Below there, the “figure” line at 400 is a logical stall area. Resistance on a bounce is now at 424, 433 and 442.

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