Russell slips back into red midday

The Russell 2000 is in the red midday, after staging a rally above the 500 level, at the time pulled higher by bargain hunters, and as energy stocks lifted other indices. At 12:19, the small cap index (NYSE:IWM) was down 6.83, or 1.36%, at 495.14.

Today’s action comes on the heels of a 5% swoon Wednesday, as fears swirled that government action wouldn’t tame the global financial tempest. Though small caps continue to waver in volatile trading, the backdrop remains gloomy. Jobless claims, out this morning, pointed to recession. The weekly unemployment claims report clocked in above the forecast at 478,000, trumping the projection by 13,000. The Labor Department said that claims were boosted some 12,000 by Hurricane Ike and that the number of continuing claims dipped slightly in the latest week.

Former Federal Reserve Chairman Greenspan, who testified in front of a House panel on the root of the financial crisis this morning, cautioned that unemployment will only rise from here as the country works through this credit crisis. “Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”

Greenspan said that a stabilization in home prices will mark an end to the credit crisis, but cautioned that wouldn’t happen for many months to come. After that stabilization, the former U.S. central bank head said investors will slowly begin to take on risk.

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

Already a member? Please log in below