Small caps tread red in shortened session

After opening lower, the Russell 2000 (NYSE:IWM) remains shallowly in the red on thin trading in a shortened trading session amid a mixed jobs report, a lower-than-anticipated ISM services reading and climbing crude prices.

While the small-cap index remains in the red, the larger-cap indices are climbing higher late morning. At 11:52 a.m. ET, the Russell 2000 was down 2.25, or 0.33%, to 670.09, while the Dow was up 103.16, or 0.92%, to 11,318.67. Equity markets will close at 1 pm ET, ahead of the Independence Day Holiday.

The Labor Department reported before the opening that the unemployment rate remained steady at 5.5% in June from May, a hair higher than the forecasted decline to 5.4%. However, non-farm payrolls tumbled 62,000, which was lower than the median forecast for a decline of 50,000. Employers remain cautious amid high energy prices and a sluggish economy. Construction, manufacturing and financial services were among the areas hardest hit, while education and health services, leisure and hospitality, and government showed gains.

“The unemployment rate stayed higher in June after soaring in May. This suggests that May’s surge in joblessness was more of a catch-up to the slow rise in the prior six months than a seasonal adjustment difficulty. Regardless, over the past year the number of unemployed has increased by 1.5 million to 8.5 million and the unemployment rate has increased by one percentage point to 5.5%. In the post-World War II period, every time the unemployment rate has jumped by a full percentage point in the course of a year, the economy has slipped into recession,” Steven Wood, chief economist with Insight Economics, said in an email.

The ISM Non-Manufacturing Survey came in at 48.2, below the median forecast of 51.5. A reading below 50 signals contraction, while a reading above 50 signals expansion. In addition, the prices paid index was the highest since the . . .

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