Slip as homebuilders, retail offset banks

Small-cap stocks edged slightly lower Monday, unable to build on the big rally from Friday as the market encountered headwinds on retailer, homebuilder and consumer product stocks that overcame positive movement on bank and financial shares. The Russell 2000 (NYSE:IWM) closed down 2.76, or 0.59%, at 467.94, and is now off 6.3% for the year. Meanwhile, the Dow is down 5.8% for 2009, while the S&P 500 is down 3.7%.

Bank stocks continued to perform solidly today, even though a delay in the announcement of the bank bail out plan was deemed necessary by the Obama Administration in order to focus attention on the fiscal stimulus debate. Energy shares were an important upside force for stocks much of the day, slipped hard in conjunction with the weak close in crude oil, but then staged a bounce back into the close. For the day, energy shares gained 0.3%.

Commodities were a bright spot for the market through much of the day, but faded late with the Commodity Research Bureau index slipping into negative territory by the close, led by the reversal in crude oil and a slide in copper, which pulled back after hitting two-month highs in New York trading.

Crude oil futures closed down 1.5%, or $0.61 a barrel, at $39.56, slipping back below the $40 level after trading above $42 in the morning. Concerns about demand and the global economic slowdown eventually caught up with talk that OPEC leaders were considering further production cutbacks.

There was also some thought that investors were starting to fret about the stimulus plan vote, which was expected at some point today. Stumping for the plan on a trip to Indiana, President Obama said, “I am calling on Congress to pass this bill immediately. Endless delay or paralysis in Washington in the face of this crisis will bring only deepening disaster.”

Even when the market was trying to rally earlier in the day, there were warning signs that the move lacked staying power. For one thing, small caps were noticeably lagging strength in large-cap indices; and for another thing, market breadth in the form of gainers versus losers and new highs versus new lows favored the bearish . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below