Credit, financial fears crunch small caps

Small-cap stocks pushed lower Monday as credit crunch fears resurfaced, igniting a flurry of selling in the financial sector that spread into several other arenas as well. The Russell 2000 (NYSE:IWM) tumbled 7.25, or 0.97%, to 741.03. For much of the day, small caps appeared set to generate the largest one-day percentage decline in nearly a month, but some late buying in the final half-hour lifted the market well off the intraday lows.

Renewed concerns about the credit crisis originated overseas in the United Kingdom when Bradford & Bingley (LON:BB), a large mortgage provider for residential rental units said that housing market woes are deepening. Shares in Bradford & Bingley tumbled 24% and sparked selling enthusiasm in various European banks.

Selling in financial shares picked up additional momentum when Standard & Poor’s lowered credit ratings on some key U.S. securities firms. Lehman Bros. (NYSE:LEH) shed over 7% on the ratings news, while Morgan Stanley (NYSE:MS) and Merrill Lynch (NYSE:MER) both lost over 3%.

In addition to the concerns over mortgage houses, brokerage firms and other financial shares, a couple of major American banks changed up top management leaders, which also shook up the market. Wachovia Corp. (NYSE:WB) ousted its CEO and the stock slid about 2%. Meanwhile, Washington Mutual (NYSE:WM), said it would strip away the title of chairman from its chief executive next month. Washington Mutual shares dipped to their lowest level since mid-March on the news, but bounced back to close near steady levels.

Even though the credit crunch concerns dominated investor psychology today, a reversal in crude oil from overnight losses probably didn’t help matters for the bulls. Crude oil climbed back to nearly $128 dollars a barrel, while gold pushed higher. In addition, wheat futures jumped 2.7% and corn rallied about 2.6%. The Commodity Research Bureau Index climbed 0.85% and is just slightly below the record . . .

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