Small caps tread shaky waters

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Small-cap stocks struggled to stay in the black at mid-session today after being weighed down by a rising crude price and a government report showing the U.S. unemployment rate at a four-year high. At 12:30 p.m. ET the Russell 2000 (NYSE:IWM) was up 0.51, or 0.07%, at 715.03.

Today’s monthly U.S. Labor Department employment report showed unemployment rates had jumped 5.7% from the previous month to the highest level in four years. Part-time workers rose by 291,000, citing a weak economy and job market for taking on part-time employment. On the upside, the United States shed 51,000 non-farm jobs, better than analyst estimates for a decline of 75,000 jobs. 

After several days of declines in crude oil prices, the commodity has begun to slowly edge upward. By mid-session, a barrel of light, sweet crude was at just under $126, much higher than the low $120s it was trading at earlier in the week. Statements from Israel’s Deputy Prime Minister Shaul Mofaz that Iran was nearing a “major breakthrough” in its nuclear weapons program and that Israel has to “make sure we are prepared for every option” spurred speculation of an Israeli attack on Iran. In the past, Iran has warned it will block the Strait of Hormuz — an area in which one-fourth of the world’s oil is exported —  if attacked.

In large-cap headlines, giant auto manufacturer General Motors Corporation (NYSE:GM) posted a $15.5 billion second-quarter loss as U.S. sales and leases both dropped. The loss was the third largest in the company’s 100 years in business.

Computer server and software manufacturer Sun Microsystems Inc. (Nasdaq:JAVA) fell more than 12% today after reporting a 73% drop in its earnings. The company cautioned that it anticipates further losses in the current quarter because of softness in the current economy. The news dragged other tech stocks down.

Broad market sectors gaining ground today include office supplies; forestry and wood products; printing services; and oil and gas operations. Sectors taking a turn south include iron and steel; construction-raw materials; auto and truck . . .

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