Homebuilders, retailers counter sinking energy

Small-cap stocks hovered near steady levels into mid-session trading, with support from retail, homebuilder and financial shares countered by sinking energy and technology shares. At 12:36 p.m. ET the Russell 2000 (NYSE:IWM) was up 0.06, or 0.01% at 453.82, while the Dow and S&P 500 were both suffering losses approaching 1%.

The International Council of Shopping Centers said that November sales plunged a record 2.7% on a year-over-year basis as very few major retailers were able to generate positive sales numbers. Despite the gloomy news, investors made a risky bet that this marked a bottom point for retailers and that all the bad news was already priced into the market. The S&P Retail Index was actually up nearly 5% at midday.

In a familiar theme this week, homebuilder shares were still a hot item today. The ISE Homebuilders Index was up more than 7%. Small-cap firms like Centex Corp. (NYSE:CTX) were up 12%, while Lennar Corp. (NYSE:LEN) was up about 14%. In recent days, there has been a growing hope that a new push to lower mortgage rates will strike up activity in the downtrodden housing arena, and indeed this week’s MBA Mortgage Application Index jumped a whopping 112% to the highest point since mid-February. That’s not to say all the economic news is roses and cream; after all, today’s factory orders report was below expectations and the worst showing in eight years and the number of Americans forced to file for extended unemployment insurance is at 26 year highs.

The energy market is clearly not comfortable today with the economic picture around the world. Crude oil prices tumbled to near four-year lows amid worries about a global recession, finding little comfort in a fresh string of rate cuts from central bankers in Europe overnight. The slide in physical markets took a toll on energy stocks as well, with the Energy Select Sector SPDR Fund down 3.3%.

Individual small caps making noteworthy moves today include Parkervision Inc. (Nasdaq:PRKR), which gapped higher and soared some 65% on unusually heavy volume amid news that the wireless communications firm has entered into a joint . . .

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