Small caps tumble to two-month lows

Small-cap stocks edged lower on the open, pulled down by overseas equities declines and an on-going rout in the financial arena. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 12.36, or 1.72%, at 707.45, sinking to the lowest level since April 24.

Into the U.S. stock market opening, prices for “black gold” were off from the overnight highs quite a bit, which helped trim opening losses for equities. In overnight action, crude oil prices climbed near $139 dollars a barrel amid rumors of an attack on Iran. The rumors were denied by Iranian officials and crude oil prices gradually pulled back off the highs. By the opening, crude oil prices actually slipped into the red a tad and were bouncing back and forth around steady levels.

The consumer confidence report came out at 50.4, which was well below the forecast of 56 and down from a revised 58.1 reading last month. The figure was a fresh 16-year low and equity markets and the U.S. dollar extended losses after the soft data on confidence.

The FOMC started a two-day policy meeting today, and some traders may go into hibernation waiting for the official rate news Wednesday afternoon. Fed funds futures have priced out any chance for a rate hike from this meeting, and the market is expecting interest rate policy to move into a hold mode.

The Case-Shiller U.S. home price index came out at minus 1.4% versus minus 2.2% in March. The year-over-year decline was a whopping minus 15.3%; although the numbers are numbingly bad on face value, they were actually a touch better than feared, sparking hope that housing market declines are nearing some kind of . . .

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