Choppy trade awaiting stimulus news; bank plans

Small-cap stocks slipped back into negative territory after a brief morning rally stalled out. Large-cap indices were hovering near steady levels reflecting investor indecision about the stimulus and bank bail out package as traders basically were sitting on their hands waiting on fresh news out of Washington. At 12:19 p.m. ET, the Russell 2000 (NYSE:IWM) was down 1.82, or 0.39%, at 468.89.

Volume seemed quite light through morning activity, but it was interesting to see that bank stocks were among the strongest performers, so investors clearly weren’t too put off that a Washington rollout of the bank rescue plan was pushed back a day to allow lawmakers to focus on the stimulus debate.

The KBW Banking Index was up 2.5% at mid-session, and regional banks were on a roll, hoping that the rescue plan would avert nationalization of the big banks that battling for survival and also prop up smaller banks bogged down by tight credit and hurt by toxic assets. Small-cap regional bank Fifth Third Bancorp (Nasdaq:FITB) jumped 12.5%, and was clearly not rattled by a price cut on the stock from Morgan Stanley. Small-cap regional bank Huntington Bancshares Inc. (Nasdaq:HBAN) jumped 22%, one of the largest percentage movers within the group.

Energy shares were another source of strength today, with the Energy Select Sector SPDR Fund up 1.3% at midday, helped along by a rise in crude oil prices amid talk of further OPEC production cutbacks. The U.S. dollar was down today, providing support to commodity themes as hope for a bank bail out package spurred some . . .

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