Reverse early slide as home sales data top forecast

Small-cap stocks tumbled to fresh move lows early Monday, slipping to the lowest point on intraday charts since August 2003, but mounted a nice recovery rally on a stronger-than-forecast new home sales release. The early decline was fueled by steep losses in global equity trading overnight, which underscored fear of a global growth slowdown. At 10:05 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.16, or 0.67%, at 474.28.

The new home sales report came in at an annual rate of 464,000, which was above the forecast of 455,000. Inventories were down as well, slashes to the lowest point since June 2004, and the steepest one-month percentage decline on record, which was embraced by the stock market. However, the sales were enticed by lower prices, as the median sales price dipped to $218,400, the lowest level since September 2004.

After a relatively slow week on the data front last week, today’s new home sales report kicks off a more active run of economic releases this week. In addition, Wednesday’s FOMC and Thursday’s GDP report will be highly anticipated.

There was a massive 61-handle range in S&P 500 futures overnight as the market rejected an initial rally Sunday evening in response to a bruising collapse in stock markets in Asia. Japan’s Nikkei lost some 6% and closed at the lowest point in 26 years. Meanwhile, Hong Kong was off 12.7%, generating the largest one-day drop in nine years. Elsewhere around Asia, losses in the 4% range were common.

Commodities were on the defensive again today, with crude oil prices down about $0.80 a barrel dollars after the stock market opening. Overnight, crude oil prices were down more than $2 a barrel to the lowest point in 17 months, but stabilized when the U.S. stock market’s initial decline was not as bad as feared. Commodities in general were taking a hit this morning, pulled down by a strong tone in the U.S. dollar, which rose to the highest point versus the euro since April 2006. Although crude oil prices were climbing back toward level ground, the firm dollar did spark . . .

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