Sellers still abound amid financial jitters

Small-cap stocks pushed lower again on Monday, pressured by sinking financial shares as yet another big name financial firm unveiled a capital raising effort. The Russell 2000 (NYSE:IWM) closed down 5.11, or 0.69%, at 735.26. Small caps were quite a bit weaker than large-cap stocks, narrowing the wide spreads that developed during last week’s volatile action.

For the last couple of weeks, Lehman Bros. (NYSE:LEH) has been the poster child for credit crunch concerns, and after days of speculation the firm finally announced plans to raise $6 billion in capital to shore up balance sheets. The Lehman news today sparked another bout of selling in the stock, which lost about 11% on the day. In addition, other large financial firms were pulled into the undertow, with JP Morgan (NYSE:JPM) down 7% and Merrill Lynch (NYSE:MER) off 4%. The credit concerns are not solely a large-cap issue. In fact, during most of the credit crisis, small caps have tended to suffer relative to large-caps on a perception that the large banks and other financial firms have easier access to credit lines.

Early today, small caps gathered some relief bids from a pullback in crude oil prices, which slipped some $4 dollars a barrel back below $135. Still, national pump prices popped above $4 dollars a gallon over the weekend, and it will take additional downside action in crude to spark further hope about consumer spending into the summer driving season. There also was a brief morning bid in stocks when the April pending home sales report came in up 6.3%, well above the forecast for a dip of 0.3%, but the data is for April numbers and had very little staying power with stocks.
 
Broad market sectors under selling pressure today were dominated by the financial theme. The biggest losers included thrifts and mortgage financial firms, diverse financial services shares, investment banking, regional banks and diversified banks. On the upside, aluminum, airlines, coal, oil and gas drillers were the top-performing stocks.

Small caps of note today included Rimage Corp. (Nasdaq:RIMG), which tumbled 21% as the firm lowered guidance for the second quarter. Maiden Holdings Ltd. (Nasdaq:MHLD) slipped 10% on heavy turnover following earnings news from Friday. Spreadtrum Communications (Nasdaq:SPRD) was off nearly 17% on an . . .

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