Extend slide into midday as Obama stimulus details not rolled out

Selling interest in small-cap stocks picked up momentum in mid-session, stoked by investor concerns that President Obama’s inauguration speech did not provide details of his fiscal stimulus plans. Those concerns simply added to a market already bludgeoned by steep declines in the banking sector. At 1:43 p.m. ET, the Russell 2000 (NYSE:IWM) was down 19.28, or 4.24% at 446.67.

The KBW Banking Index was hammered today, down some 13% at midday as steep losses were posted for many of the nation’s most prominent banks. Money management firm State Street Corp. (NYSE:STT) was down some 48% on huge volume after reporting disappointing results.

Looking at sector activity so far today, anything tied to bank or financial stocks were struggling. The biggest losses were seen for asset management firms, regional banks, diversified financial services companies, diversified banks and real estate services firms. The only S&P sector groups on the rise were gold, insurance stocks and tobacco companies. Gold is often seen as a safe-haven refuge, and with stocks and credit instruments on the slide today, investors were attracted to gold as a spot to park cash.

Energy shares were lower so far today, but the selling fury trailed that in other sectors as crude oil prices bounced some 3% as cold weather draped a large portion of the Northern and Eastern U.S. and on signs that OPEC is serious about production cutbacks. In addition, the dollar pared earlier gains shortly after the Obama speech triggered the fresh selling wave in equities.

Individual small-caps on the slide were highlighted by AspenBio Pharma Inc. (Nasdaq:APPY), which gapped lower and collapsed some 84% on unusually heavy volume as investors did not embrace news of preliminary results on the firm’s pain drug test. VSE Corp. (Nasdaq:VSEC) tumbled 43% on news that the Army rejected a new contract bid from the firm. MercadoLibre Inc. (Nasdaq:MELI) fell 20% as the Latin American online commerce platform reported results.

The chart picture for small-caps turned sour today with the breach of support in the 453 zone. The next support area to watch is around 440-439; a push through that area could spark a quick slide toward 416.

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