Small caps hover near steady levels; FOMC “breather”

Small-cap stocks edged into positive ground into midday trading on support from commodity names, but in general the market appeared to be in a “breather” mood after Tuesday’s manic upside push when Federal Reserve policy makers surprised the market with aggressive interest rate cuts. At 12:20 p.m. ET, the Russell 2000 (NYSE:IWM) was up 0.03, or 0.01%, at 482.87.

In addition to the natural pause in bullish enthusiasm after such a memorable rally Tuesday, today’s profit reports were lackluster at best and pretty much anything tied to homes, homebuilders, home furnishings or real estate was struggling. Real estate investment trusts (REITS) were among the poorest performers so far today, as were houseware and home furnishing stocks. Companies such as Newell Rubbermaid Inc. (NYSE:NWL) and Leggett & Platt Inc. (NYSE:LEG) were taking a hit, down 28% and 10%, respectively.

Financial stocks were a drag on the market today, with the Financial Select Sector SPDR Fund off about 1.7%. Citigroup Inc. (NYSE:C) was down some 4.7% and Bank of America Corp. (NYSE:BAC) was off about 2.9%.

Crude oil prices held relatively steady despite a hefty 2.2 million barrel a day output cut pushed through by OPEC members. Skepticism about OPEC’s ability to hold the line on production might account for some of the lack of rally response in energy markets, as well as concerns that slumping global demand remains on the radar screen for some time to come. Energy stocks were slightly higher even though crude oil prices were calm; commodity markets in general likely found underlying support from yet another dramatic slide in the U.S. dollar, which was down 2.2% against the euro and off 1.3% against the yen, setting 13-year lows against the latter currency.

Looking at individual S&P sectors, the top performers included health care facilities, coal stocks, commercial printers, railroads, mining and metal stocks and steel companies. Interestingly, the saga of a bailout package to automakers seems to have simmered down a tad amid all the FOMC hoopla, but Tuesday afternoon Treasury Secretary Henry Paulson said that automakers would get funds as quickly . . .

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