Small caps open lower on earnings worries

Small-cap stocks gave back a sizable chunk of Monday’s big rally early on today, pressured by concerns that corporate profits are already sloppy and will be further strained by a weak economy going forward. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.46, or 1.55%, at 538.37.

With no economic reports on tap today, the market will focus on the wave of quarterly earnings coming in. Although the earnings news has been mixed so far, investors clearly are concerned that even the upside surprises were already tainted by very low projections or will be pinched to perform into what appears to be a difficult 2009.

The lift small caps enjoyed Monday from the energy sector appeared on the wane today, with crude oil prices slipping on concerns about demand. Also, commodities in general were likely to be on the defensive as the U.S. dollar was soaring against the euro, climbing 1.25%, which makes commodities priced in dollar terms more expensive (and less attractive to foreign buyers).

Around the world overnight, stocks were mixed, with Japan up 3.3%, Hong Kong down 1.8%, China off 0.8%, Taiwan up 0.2%, Australia up 3.8%, Singapore down 0.9%, South Korea down 1% and India up 4.5%. Europe was in positive territory on news that France would pour some 10.5 billion euros into the banking arena, but the early slide in the U.S. market pulled down Europe.

Back to the earnings story, the one that really seemed to sum up the market sentiment this morning was Texas Instruments Inc. (NYSE:TXN). TXN shares were off 9% shortly after the open as the company projected earnings for the upcoming quarter well below the forecast, which reflects the difficult operating environment for tech companies amid a slumping economy. Also in the tech arena, . . .

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