Small caps flat while large caps struggle

Small-cap stocks waffled back and forth near steady levels into midday, with support from lower crude oil prices and a firm U.S. dollar countered by slumping technology stocks and worries about a global economic slowdown. At 12:48 p.m. ET, the Russell 2000 (NYSE:IWM) was up 1.20, or 0.16% at 739.70.

The Russell was holding up much better than other large-cap indices. The tech-laden Nasdaq 100 was down 1.3%, with key stocks like Intel Corp. (Nasdaq:INTC) and International Business Machines (NYSE:IBM) both generating sizable declines. INTC was off about 4% and IBM down about 2.5%.

In the lunchtime frame, Boston Federal Reserve Bank President Eric Rosengren said that the impact of rate cuts has been minimized by the credit crunch and he cautioned that the economy could slow down in the second half of 2008 and that the unemployment rate could surge beyond 6%. His comments seemed to have a much more dovish tone than recent Fed speak from Richard Fisher of the Dallas Fed and Jeffrey Lacker from the Richmond Fed.

Commodity names and tech stocks dominated the losing trends so far today, with coal, metals and mining, gold, semiconductors and semiconductor equipment among the biggest losing sectors. On the upside, healthcare facilities and airlines were doing well, with the latter boosted by the recent reprieve on the jet fuel front.

There were still some lingering jitters about a large hedge fund shutting down overnight. The fund, Ospraie Management LLC, had some $2.8 billion under management and reportedly has losing large sums of money on various commodity-tied equity investments. There are concerns that other hedge funds could be in a precarious position as well as the market unwinds the short dollar/long commodity trade. In the case of Ospraie, Lehman Brothers Holdings Inc. (NYSE:LEH) held a 20% stake in the hedge fund, but LEH shares were holding up reasonably . . .

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

Already a member? Please log in below