Mild midday dip amid financial fretting

Small-cap stocks drifted into positive territory mid-morning, but slipped back into the red into midday action, with support from energy, homebuilder and commodity stocks offset by weakness in the financial arena. At 12:58 p.m. ET, the Russell 2000 (NYSE:IWM) was down 2.36, or 0.33%, at 716.63.

The market made a nice recovery off opening lows, but the move stalled out just above Thursday’s highs. It has been a volatile, churning weak for stocks, but right now the Russell is basically unchanged for the week despite several dramatic moves.

This morning’s latest batch of economic data served up a negative tilt, with retail sales coming in below expectations and the “core” inflation producer price index in line with the forecast. A sentiment survey later this morning was upbeat, which may have helped the market pull off the opening swoon. Still, the weekly claims report from Thursday was a negative, and today’s reports on spending and inflation certainly didn’t suggest any turnabout for a gloomy economic horizon.

The overall market continues to fret about the future of the nation’s fourth largest investment bank — Lehman Brothers Holdings Inc. (NYSE:LEH), which is openly courting suitors after a stunning collapse in market value this week. LEH was down another 15% below $4 a share at midday today, a jarring demise from the upper $40s in May. In addition, American International Group (NYSE:AIG), the world’s largest insurer, was reeling amid 26% declines today, keeping the entire financial . . .

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