Russell rallies on confidence report, crude slide

Small-cap stocks pushed higher, recouping some of Monday’s big decline amid lower crude prices and positive economic data. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was up 9.95, or 1.43%, at 706.06.

The consumer confidence report came out at 51.9, which was above the forecast of 50 and which sparked a quick jump in the U.S. dollar while extending the morning rally in equities.

Earlier this morning, the Case-Shiller Home Price Index slipped at a record pace to minus 15.8% in May, which wasn’t a surprise to the market, but is sobering news to home owners who have seen four years of home equity wiped out during the recent downturn in housing.

Crude oil futures were pushing lower this morning, which provided some support to the stock market. The market for black gold was off nearly $2 dollars a barrel into the U.S. stock market open, backing down below $124 amid concerns about the demand picture. OPEC president Chakib Khelil said that current prices for crude were “abnormal” and that prices could fall to $70 to $80 dollars in the long-term picture if the U.S. dollar strengthens and political tensions ease. The greenback was up this morning about 0.6% against both the euro and the yen.

Traders will keep a close watch on the financial arena again today following news overnight that Merrill Lynch (NYSE:MER) announced plans to write-down $5.7 billion in debt and raise $8.5 billion in capital through new stock sales. Shortly after the open, MER shares were down 1%. Also within the financial spectrum, Citigroup (NYSE:C) was the target of negative analyst comments overnight and slumped 2.5% on the open.

Coming into the opening today, stock markets around the world were on tilt, sinking to two-week lows as the MER news sparked renewed fears about the credit crunch. Although European shares bounced off the lows, they were hit hard at times overnight, and Asian markets had a decidedly bearish result, with Japan down 1.4%, Hong Kong down 1.8%, China down 1.8%, Taiwan down 3.0%, Australia . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below