Tag - NYSE:AIG

It was a bad day for stocks. The Dow Industrials was down 185 points or 1.9%. The S&P 500 lost 22 points, the Nasdaq lost 40 points and the Russell 2000 dropped 15 points or 2.65%. On a percentage basis, the Russell was the biggest loser, which is to be expected. Small cap stocks outperform on both the up and the downside.

Retractable Tech (AMEX:RVP) was the top small cap gainer today, jumping 103%. This move came on no news that I could find, but somebody knows something – volume was huge. 

Mining and oil company U.S. Energy Corp (Nasdaq:USEG) came in second with a more reasonable 22% move. Rounding out the top 5 were Anadys Pharmaceutical (Nasdaq:ANDS) up 19% Digital Angel (Nasdaq:DIGA) up 17%, and Alpha Pro Tech (AMEX:APT) up 13%.

Not a good day for some small cap biotech stocks. Acadia Pharmaceutical (Nasdq:ACAD) was the top loser with a gut-wrenching 65% decline. Builders FirstSource (Nasdaq:BLDR) also made the list with a 35% drop. Other notable losers include, Catalyst Pharmaceutical Partners (Nasdaq:CPRX) down 21%, Gander Mountain (Nasdaq:GMTN) down 18%, and AIG (NYSE:AIG), yes THAT AIG, down 18%.

*****Yesterday's headlines made it sound like the sky was falling after China's Shanghai Index sold off 6.7%. There's no doubt, bulls are a bit nervous and bears are getting a bit bolder. That's to be expected after a six month rally that's been remarkable in that there have been no corrections.

That's also why it's imperative to keep a cool head these days: there's a big difference between what the financial media is saying and what investors are doing.

If you didn't read the news yesterday and simply watched the S&P 500, you'd wonder what the excitement was all about. The S&P dropped right out of the gate, but quickly recovered and finished the day with a -0.8% loss.

Even Chinese stocks listed on U.S. exchanges made a nice recovery from the early weakness.

*****The reason U.S. stocks are shrugging off seemingly bad news is pretty simple. The government has guaranteed much of the risk for the financial markets. That's lead to a recovery for the U.S. economy. And it's widely expected that the U.S. economy is putting up decent growth numbers in the third quarter, which is now two-thirds over.

Oil's action yesterday is also telling. Yes, oil was down. It traded below $70 a barrel yesterday. But it's hard to call that bearish. After all, oil just hit a new high at $75 a few days ago. A little consolidation, or profit-taking is in order.

Frankly, the relatively small correction for oil prices seems bullish when you consider how important the China growth story is for oil prices. That could change, of course. But right now, there's' no reason to panic that the rally is over and the bear market is coming back.

*****The main concern for the bulls right now should be third quarter earnings. In my opinion, the low rate of revenue growth for corporations is the biggest threat to the Cash for Clunker Stock Rally.

According to Goldman Sachs, 46% of companies soundly beat earnings expectations in the second quarter. But only 23% did so with a healthy boost to revenues.

For the most part, earnings growth was a result of cost-cutting. And without a rise in revenues, there's no way for earnings to keep growing. Retail stocks will show this most clearly, as they are most dependent on consumer spending.

*****Before I finish for the day, I want to discuss Chinese stocks a little more. Yesterday, I mentioned that economist Andy Xie is calling the Shanghai Composite a bubble. And that may be.

But ever time I review the Chinese stocks that are in the SmallCapInvestor PRO (and believe me, I review them frequently), I'm encouraged by the low valuation and attractive growth prospects.

The highest forward P/E among them is 14.5. And the PEG ratios average around .5.

Now, it could be that aggressive lending in China is pumping revenues artificially, and that's showing up in P/E and PEG ratios. But SmallCapInvestor PRO Chinese stocks are well diversified between energy, biotech, commodity and technology. I'm not convinced that all of these stocks are being lifted by the same loose lending practices.

*****Also, I'm releasing a new micro-cap report to SmallCapInvestor PRO readers today. This report features my "best bet" micro-cap stocks to post triple-digit returns. If you'd like to get that report, or find out about the Chinese stocks we're holding, click here.  
 
Until tomorrow,

Ian Wyatt
Editor
Small Cap Investor daily

P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Stocks continued their slide today as traders are holding tight until they get the Fed's word on the economy. Bernanke & Co. are expected to wrap things up tomorrow, so we could see another round of lower closing prices. 

The Dow closed down 96.50 points at 9,241.45; the Nasdaq finished at 1,969.73, down 22.51; and the S&P 500 fell back below 1,000 to finish the day's session at 994.35, down 12.75 points. 

Stocks in the Russell 2000 were down 9.75 points to end at 562.12. 

Oil closed at $69.38, down $1.22 and gold was at $946.20, up $1.20.
Bucking the downward trend were small-caps like Avanir Pharmaceuticals (Nasdaq:AVNR) up 30%; EchoStar (Nasdaq:SATS) up 19%; and Ivanhoe Energy (Nasdaq:IVAN) up 15%.  

Trending down with the broader markets many small-cap outpaced the market's fall, including Anthracite Capital (NYSE:AHR), down 30%; Javelin Pharamceutical (Amex:JAV), down 27%; Petroleum Development (Nasdaq:PETD), down 22%; and Flotek Industries (NYSE:FTK), down 20%. 

*****Have you noticed that analysts are starting to downgrade stocks? Sprint Nextel (NYSE:S), Yum Brands (NYSE:YUM), PETsMART (Nasdaq:PETM), MBIA (NYSE:MBI) and Aegon (NYSE:AEG) were all marked down by analysts yesterday.  
Coverage was initiated on American Express (NYSE:AXP) at "Sell" by Ladenburg Thalman. Boeing (NYSE:BA) and Research in Motion (Nasdaq:RIMM) have also been downgraded in the last few days.  

So what gives? If everyone's so bullish right now, why are stocks getting downgraded?  
First, stocks have rallied strongly since March. And second, there's no guarantee that earnings can continue to rise. The analysts may be playing it safe, but investors should take note.  

*****AIG (NYSE:AIG) has doubled in the last three days. If there was ever a company that shouldn't double, it's AIG. The government owns something like 90% of the company. And it's actively selling off its important pieces to pay off debt. It's highly unlikely there will be any return for common shareholders.  

And if a completely speculative stock like AIG is moving, we might expect to see others. And sure enough, General Motors, which now carries the ominous name Motors Liquidation Company (MTLQQ.PK), has very nearly doubled in the last week. I don't think that's a good sign for the health of the stock market.

*****Word is that more traders think the dollar may have put in an important low. That would be bad for stocks and commodities. To follow the action, watch the iShares Barclay's 20+ Treasury Bond Fund (TLT).

When this ETF rallies, stocks are usually selling off. And the chart for TLT shows a pretty decent looking double bottom at $90.

*****The latest FOMC meeting starts today. Nobody really expects the Fed to raise interest rates. Even the inflation crowd has to admit that the economic recovery is too frail for higher rates. Still, judging by the declines in the stock market, investors are nervous about what the Fed has to say.

Alan Greenspan used to try to let his words act as monetary policy. Instead of actually moving rates, he would voice his bearish opinion, in the hope that he could keep a lid on asset prices.

It didn't work. And I hope Bernanke doesn't make the same mistake. There's no substitute for actual changes in rates. And despite the weak economy, investors could probably use a message about asset bubbles and risk.  

*****The Managed America Internet video conference aired last night with great success. You can still catch it if you missed. There's a replay available HERE if you're interested in discovering the trends that will affect your investments for the next couple of years and how you can profit from them.

Ian Wyatt
Editor
Daily Profit

P.S. Investors have been asking me about commodities plays. They know that long term inflation will kick in once the recovery starts to ramp up and that will drive commodities, and the share prices of the underlying stocks, through the roof. My Global Commodity Investing advisory service is benefiting from current commodity prices and will provide one of the only safe havens for profits when inflation picks up. Click here to find out more about Global Commodity Investing.

 

Stocks put up an impressive rally today after two straight days of decline. June payroll numbers and bank recovery and strength data were the underlying drivers of today's run. Even the beleaguered American International Group (NYSE:AIG) saw shares surge 20% to $27.14 on news that it had posted its first profit in nearly two years.

The Dow closed at 9,370.07, up 113.81 points; the Nasdaq pushed back through and held over the 2,000 mark to end the week at 2,000.25, up 27.09 points; and the S&P 500 got back over the psychological hurdle of 1,000 to finish at 1,010.48, up 13.40 points for the day.

The Russell 2000, a composite of the 2,000 leading small-cap stocks, close up 14.78 points to end the day at 572.40. This represents a 2.65% gain for the day versus daily gains of only 1.23%, 1.37%, and 1.34% for the Dow, Nasdaq, and S&P 500, respectively.

Small-cap volume price gainers were lead by Media General (NYSE:MEG), up 31.25%. Media General was followed by Crocs (Nasdaq:CROX), up 28.57%; YRC Worldwide (Nasdaq:YRCW) up 25.56%; Aircastle Limited (NYSE:AYR) up 23.30%; and Cogent Communications (Nasdaq:CCOI), up 22.09%.

*****The unemployment rate…fell? 247,000 people lost their job in July and that was enough to push the jobless rate down to 9.4% from 9.5%. 

July was a lot better than June, when 443,000 people lost their jobs. And the talking heads are already saying its more evidence that the economy is stabilizing.  

What I want to know is: how does the unemployment rate drop after 274,000 more people become unemployed? Were there that many employed 17 year-olds with a birthday in July? Or was it the upward revision of 43,000 to May and June payroll number?  

Despite today’s nice number, unemployment is still expected to rise into double digits early in 2010. And unemployment is expected to average 9.8% for all of 2010. That means that whatever growth we have right now is about we can expect for next year.  
*****It’s clear that investors are buying stock in the hope that that growth will return to the global economy sooner than pretty much every economist on the planet expects. Or maybe they’re buying stock just because prices are moving higher.  

But there are plenty of potential surprises looming. Last week, Treasury Secretary Geithner said the unemployment rate may not peak until the second half of 2010. Now, imagine if stocks stay strong into next year and the unemployment rate remains stable. Investors will assume the economy is poised for a growth. I bet they’d be pretty disappointed if unemployment spiked in August or September of 2010. 

*****Whatever happens next year, socks are rallying strongly today. As well they should. The unemployment rate is falling, money is cheap and the government has declared that there is no downside.  

The Treasury is considering canceling the 20-year Treasury inflation-protected security (TIPS) and issuing a 30-year TIPS. This can be interpreted as a bold insurance to investors against inflation.

As we know, investors, especially foreign buyers of American debt like China, are worried about inflation and weak U.S. dollar. If the Treasury issues longer dated TIPS, it’s essentially saying that it will reimburse investors if inflation does rise sharply. That’s either bravado, or a sincere belief that inflation is not as much as an issue as some fear.  

Either way, the government has backed just about every other negative potential in the current economy, why not take on inflation too? 

*****TIPS are one way to protect you money against inflation. Buying commodities is another. My Global Commodity Investing advisory service is doing quite well as commodity prices continue to rise. You can learn more here.  

*****I’d like to thank SCI Daily readers for your help with the T-shirt slogan contest to support the launch of my first book, The Small Cap Investor: Secrets to Winning Big with Small Cap Stocks. We're taking submissions on the Small Cap Investor page on Facebook or by email (tshirt@smallcapinvestor.com) until Sunday, August 9th.  

Everyone who submits a T-shirt slogan will get a 30-day, 100% complimentary subscription to my SmallCapInvestor PRO advisory service. The winner gets a one-year subscription to ALL of my advisory and trading services (a $2,680 value), plus a signed copy of the book and three t-shirts.  

*****Now, here’s TradeMaster Daily Stock Alerts technical analyst Jason Cimpl and his weekly video market forecast. It’s been a wild week and investors need to know what’s going happen next week. Click here to view Jason’s video charting analysis; it’s free. 

*****The Managed America web video conference is coming up next Monday, August 10 at 6:00 P.M. It's free to attend and you can register right now. Click here to register for this free online event. 

That's it for today. Have a great weekend.

Stocks moved in a seesaw pattern today as they opened high and then slid during the opening hours only to sharply pick up before noon eastern time.

Shares on the Dow closed up 28 points to end the day at 8,359. The Nasdaq finished up 7 points to close at 1,800 and the S&P 500 was up almost 5 points to close at 906.

The Russell 2000, an index of the 2,000 most influential small-cap stocks as determined by Russell Investments, closed the day's trading session at 496, up 3 points.

Small-cap volume leaders today include beleaguered finance firm CIT Group (NYSE:CIT) trading 165 million shares, followed by American International Group (NYSE:AIG), and previous SmallCapInvestor PRO recommendation DryShips (Nasdaq:DRYS). (Find out more here)

Price gainers in the small-cap space were lead by Nevsun Resources (AMEX:NSU) up 32% following news that it had received all approvals for debt facilities totaling $235 million to begin mining copper and gold in Eritrea. The Vancouver-based mining firm expects to be able to repay the entire debt within two and one-half years.

Other small-cap gainers include Noven Pharmaceuticals (Nasdaq:NOVN) up 22% on news that Japan-based Hisamitsu Pharmaceutical plans to increase its U.S. presence in purchasing the company for $16.50 a share; Excel Maritime Carriers (NYSE:EXM) up 21%; and CIT Group (NYSE:CIT) up 20%.

*****The day after the home run derby was held during baseball's All-Star festivities, it's probably appropriate that Goldman Sachs (NYSE:GS) hit it one out of the park.

I'm referring to Goldman's 2nd Quarter earnings blowout. Goldman beat revenue and earnings estimates by better than 30%. Clearly, just like the sluggers in the homerun derby, Goldman had softball pitches thrown right down the center of the plate to hit.

Don't forget that even the bears' best friend, bank analyst Meredith Whitney, turned bullish on Goldman yesterday. It would appear that she could see the writing on the wall - analyst estimates were simply too low.

But why? How could analysts miss Goldman's quarter by such a wide margin? Could it be that they are deliberately low-balling estimates to keep the rally going?

*****Goldman Sachs is up in the early going, but not as much as you might expect. That suggests that the blowout numbers aren't a surprise at all. It was already priced in during Monday's 10% rally.

This type of behavior from analysts puts individual investors in a difficult position. I suspect that buyers above $150 will be showing a loss in the near future. Once again, we are being suckered. And that's business as usual for Wall Street.

*****If you focus on the gain in the Producer Price Index (PPI) from this morning, you're probably thinking that inflation is on its way after prices rose 1.8% in June.

But if you focus on retail sales, you probably see the 0.6% rise in retail sales as a sign of recovery.

So which is it: inflation or recovery? The answer is: both. Inflation is an inevitable by-product of economic expansion.

Now, obviously, the U.S. economy is still playing catch-up. And there's an outside possibility that the economy will grow this quarter. But the most important thing to realize is that both the retail sales number and the PPI number are almost directly related to government actions.

If you exclude auto and gasoline sales, retail sales actually fell for a fourth straight month. Auto sales have been helped by government incentives to trade in a gas guzzling clunker for a new, more efficient vehicle.

The PPI was affected by another government incentive program - the yield on Treasury bills. As the Treasury sells more and more bonds, it has to offer a higher yield to entice buyers. This, along with the sheer amount off Treasuries that are being sold, is driving the value of the U.S. dollar down. That, in turn, is driving oil and gas prices higher. Without food and energy, the PPI only rose 0.5%.

*****Government actions are currently filling in for an actual economy. That's how it is in our new "Managed America." Most expect the heavy hand of government to be temporary, and that Managed America can end sooner than later. We'll see…

I expect the conditions of Managed America - high unemployment, sluggish growth, more regulations, higher taxes, and inflation to last years instead of months. And I've outlined my expectations for investing under these conditions in my new Special Issue of Top Stock Insights. The article is titled Managed America: The New Economic Reality. It will be released tomorrow. You can sign up for Top Stock Insights and get my blueprint for profiting in Managed America when you click here. You'll also be on the list to receive my Predictions 2009 Issue update for the remainder of this year.

Stocks closed higher today as Meredith Whitney's comments on Goldman Sachs (NYSE:GS) helped to lift financials, including Bank of America (NYSE:BAC), which she indicated as being inexpensive. Previously she'd been down on financials and very accurate with her assessment concerning their exposure to sub-prime mortgages.

The Dow closed up 185 points today to end at 8,332. The Nasdaq and S&P 500 followed suit to close at 1,793 and 901, respectively.

The Russell 2000 closed at 492, up 11 points.

Small-cap stocks showed leadership behind Territorial Bancorp (Nasdaq:TBNK) of Honolulu, Hawaii, which was up 49% to close at $14.94. Shares in TBNK started trading today as part of an initial public offering with the opening price set at $10.

Other small-cap gainers include PMI Group (NYSE:PMI) up 31%; iBasis (Nasdaq:IBAS) up 28% on news that Dutch telecommunications firm Koninklijke KPN issued an offer of $1.55 per share or roughly $48.2 million to acquire 44 percent of the shares outstanding in iBasis; and American International Group (NYSE:AIG) up 24%.

Decliners were lead by China-based baby formula producer American Dairy (NYSE:ADY) down 44% after issuing news that it had reduced guidance by stating that Q2 revenue would be increase only 10% against the year-prior period.

American Dairy had previously grown by nearly 200% after the company was untainted by the scandals surrounding other Chinese dairy producers over contaminated baby formula that left six infants dead and millions of gallons of milk considered suspect and destroyed.

Other decliners include CardioNET (Nasdaq:BEAT) down 34%; Sinclair Broadcast Group (Nasdaq:SBGI) down 21%; and American Axle & Manufacturing (NYSE:AXL) down 15%.

*****A few weeks ago, Treasury Secretary Geithner had to go to China to assure our largest creditor that their investment in the U.S. dollar was safe. Now he's off to Saudi Arabia and United Arab Emirates for another round of "strong dollar" propaganda.  
Of course, it's not an easy task to convince foreign governments that the U.S. wants a strong dollar when interest rates are at zero and we're selling tens of billions in Treasury bills virtually every week. You may recall Geithner's assurances elicited laughter from a group of Chinese college students when he made the strong dollar pledge there.  

If college students know the score, you can bet everyone else does, too.  But Treasury auctions have been met with plenty of demand, and that's a good thing.

*****Fed Chief Bernanke is expected to reveal to Congress just how he plans to reverse his stimulative monetary policy next week. The Fed has expanded the money supply by about $1 trillion, cut rates to zero and doubled the assets on its balance sheet.  

In normal times, this would be highly inflationary. But these aren't normal times. Were it not for the Fed's action, the U.S. economy would be broken even more than it already is.  

Now, normal times will return. And how the Fed plans to reel in liquidity when the economy starts to grow again is critical. The potential for runaway inflation is real, and the Fed will have to be just as diligent at fighting inflation as it was fighting deflation.  

*****Goldman Sachs (NYSE:GS) received an upgrade from the very same banking analyst that predicted collapse of mortgage-backed securities, Meredith Whitney.  
Upgrading Goldman is easy. The bank is practically a subsidiary of the U.S. government. But the timing is interesting, given that Goldman reports earnings before the bell tomorrow.  

And speaking of earnings, this is a big week for some important companies. In addition to Goldman, we get Intel (Nasdaq:INTC) after the bell tomorrow. Thursday, we'll hear from JP Morgan (NYSE:JPM), Google (Nasdaq:GOOG) and IBM (NYSE:IBM). Then Friday, we get General Electric (NYSE:GE), Bank of America (NYSE:BAC).  

Tech and financials - the anchors for the U.S. economy will be reporting this week. Investors will be watching these early earnings reports closely. Much of the rally of the past few months can be attributed to investors' faith in companies meeting Q2 earnings, even if expectations were substantially lowered. Any bad news from these bellwether companies and the market could turn. We'll be watching closely. 

*****As if earnings weren't enough, there's a full slate of economic data coming out this week, too. Tuesday, it's the Producer Price Index (PPI) along with retail sales and business inventories. 

Wednesday, we get the Consumer Price Index (CPI), the Empire Manufacturing Survey from New York state, capacity utilization, industrial production, crude inventories and the minutes from the last FOMC meeting. 

Thursday, it's initial unemployment claims and the Philadelphia Fed. 
And finally, on Friday, we get building permits and housing starts for June.   
Whew! That's going to be a lot of data to review.  

*****On January 15, my Top Stock Insights advisory service released its Predictions 2009 special issue. This issue was our blueprint for profits with mid- and large-cap stocks as we headed into the new year.  

In that issue, I outlined the case for oil, gold, commodities and biotech/healthcare stocks. And we took 51% profits on an oil stock, 25% on a gold stock, another 25% on a commodity stock and we're still holding three biotech/healthcare double-digit winners in the portfolio. 

In other words, our expectations for the year led my readers to some nice gains this year, and there's more to come... 

Now, I'm all set to release an update to that special Predictions issue that will get us through the rest of this year with more solid gains. It comes out on Wednesday, and if you'd like to get my blueprint for profits for the rest of 2009, please click here. Or go to topstockinsights.com. 

*****Also, if you missed TradeMaster Daily Stock Alerts technical analyst Jason Cimpl's weekly video chart analysis, here's that link again. 

Stocks were mixed today as the both the Dow and S&P 500 closed down while the Nasdaq was up. Falling oil prices and continued investor unease over earnings sent stocks mostly lower for the day.

The Dow closed down 36 points to 8,146, the Nasdaq closed up 3 points to 1,756, and the S&P 500 closed down 4 points to end the week at 879.

The Russell 2000, a widely-followed bellwether index for small-cap stocks, closed up almost 2 points to end the week at 481.

Advancers in the small-cap space were lead today by MTR Gaming (Nasdaq:MNTG) up 51% on heavier than average volume. Through its subsidiary organizations, MTR Gaming engages in the racing, gaming, and entertainment businesses. With nearly 3,000 employees, MTR Gaming's properties include Presque Isle Downs & Casino and Mountaineer Casino in West Virginia.

Other small-cap winners include yesterday's leading decliner, American International Group (NYSE:AIG) up 24%; Dana Holding Corp. (NYSE:DAN) up 38% on news of an analyst upgrade based on the firm's improved liquidity situation; and A-Power Energy Generation Systems (Nasdaq:APWR) up 17% on announcing a signed agreement to build an offshore liquefied natural gas facility near Macau, China.

Decliners include Community West Bancshares (Nasdaq:CWBC) down 21%; Cordus Valley Bancorp (Nasdaq:CVLY) down 13%; and Tower Financial Corporation (Nasdaq:TOFC) down 12%.

*****Oil dropped below $60 a barrel as consumer confidence came in below expectations. The belief is that when the American consumer is not confident, he or she does not spend money.  

That's true to an extent. A brief look at airfare and hotel deals will tell you that Americans are not traveling as much as we have in the past. Indeed, just visit Yahoo! News and put in the term "hotel bankruptcy" and you get over 1,100 results with articles highlighting the latest hotel bankruptcies: tough time to be in the hospitality business.  

And retail sales showed clearly that we aren't headed to the mall as much, either. But iPhones seem to be selling pretty well. And foreclosure sales have been going pretty well, too.  

As for oil, the schizophrenic International Energy Agency (IEA) just raised its demand forecast for 2010 by 1.4 million barrels a day. Seems like the IEA was just lowering estimates a couple weeks ago.  

In any event, after taking profits on oil positions in my Top Stock Insights and SmallCapInvestor PRO advisory services, I'll be looking to buy oil stocks again sometime in the next couple of months. That's because demand is only half the story on oil. (Click here to find out more about Top Stock Insights and click here for SmallCapInvestor PRO.) 

Oil companies are not investing as much to bring new supply on line. So when demand does return, companies won't be able to ramp supply quickly enough. This will lead to demand outstripping supply. And prices will rise. In fact, some believe supply and demand will reach parity in 5 years or less. That's a dangerous situation. And as an investor, you are almost obligated to own oil stocks.  

*****"We are at the cusp of stabilization…" So says Stephen Stanley, chief economist at RBS Securities. Economists are raising their growth forecasts for the second half of 2009 from 1.2% to 1.5%.  

Granted, that's not a big move, but we'll take what we can get. And maybe a little bullish talk will help consumer confidence.

Of course, consumers will probably notice when unemployment averages 9.8% in 2010. The U.S. economy has changed in some fundamental ways. The auto and finance industry job cuts may well be permanent. And it could take a few years for new jobs to be created.  

*****Cold War politics are alive and well. At the G-8 meeting in Italy, Russian president Medvedev pulled a coin from his pocket that he said represents the new world currency. Medvedev even has the motto for this global currency worked out - "unity in diversity" is printed on the coin that was minted in Belgium. Quaint, isn't it?  
What does Russia hope to gain with this tactic? Nobody wants to buy their bonds. And a global currency won't give Russia any new influence. Oil is priced in dollars, but even then, a new currency won't affect oil's value, only its relative price. 

So it would seem that Russia is simply messing with the U.S. And that's a strategy that could backfire, mainly because Russia has no leverage. I'd expect to see other countries come out in support of the U.S. dollar just because Russia doesn't like it.  
*****Now, here's TradeMaster Daily Stock Alerts' Jason Cimpl with his weekly video chart analysis. Enjoy! Click here to view the video.

P.S. Next Wednesday I'm releasing an update to my Predictions issue for Top Stock Insights. We did the first issue of it back in January to lay out how investors should invest in 2009. We were spot on and make huge profits for subscribers. This new update comes at a time when the market rally appears to be petering out and investors really need solid data and investment ideas. Click here to sign up for your copy and a 30-day trial to the service.

Stocks slid during the morning session and began a more gradual recovery after noon eastern time. The Dow closed up 4.76 points to 8,183 in choppy trading all day and on news that initial jobless benefits claims came in at 565,000 down from the 605,000 that analysts had expected.  

Both the Nasdaq and the S&P 500 closed up today at 1,752 and 882, respectively. 
The top 2,000 small-cap stocks making up the Russell 2000 closed down 0.4 points to end the day's trading at 479. 

Small-cap gainers were lead by Superior Bancorp (Nasdaq:SUPR) up 22% on heavier than normal volume. The stock opened today at $2.19 and hung around that level until shortly after 1:00 p.m. eastern to spike to $2.75 within 15 minutes. The remainder of the trading session saw SUPR trying to push through resistance at $2.97 before settling at $2.69. 

Other small-cap gainers for today include Park Bancorp (Nasdaq:PFED) up 21% to close at $8.70 from a previous close of $7.19; MOD-PAC (Nasdaq:MPAC), a manufacturer of folding cartons in north America, up 20%; and Chicago Rivet & Machine (Amex:CVR) up 25%. 

Decliners in the small-cap space were lead by American International Group (NYSE:AIG), down 28% on news that the company is potentially looking to sell parts of its foreign life-insurance units to MetLife (NYSE:MET). This comes on the heels of AIG's announcement last week that shareholders had approved a 1-for-20 reverse stock split in an effort to maintain the firm's listing on the New York Stock Exchange. 

Other small-caps losing in today's session include United Community Bancorp (Nasdaq:UCBA) down 17%; Tuesday and Wednesday's high flyer, Novagen (Nasdaq:NVGN) was down 20% as profit-takers continued the sell-off that started Wednesday afternoon; and MedQuist (Nasdaq:MEDQ) down 13%.

*****Earnings season has begun. Alcoa (NYSE:AA) kicked things off with a report that was better than expected, even though the company lost $454 million in the second quarter. Yes, nearly half a billion dollars.  

Alcoa went on to say that aluminum demand will be down 7% this year. One analyst widened his loss estimates for the remainder of this year and 2010. And yet the stock is up 6% in the early going.  

How can that possibly be bullish, you ask?  

Well good question. And the answer may not come as that much of a surprise: China. Alcoa believes that Chinese stimulus spending may help it become "…free cash flow positive very soon…" Alcoa's CFO said.

*****I've discussed China's stimulus plans at length here in Daily Profit. And I've also been aggressively adding Chinese stocks to the SmallCapInvestor PRO portfolio. (Click here to find out which ones.) 

But it's still nice to hear from a major U.S. corporation that China's $585 billion stimulus spending plan is expected to have a positive effect on commodity pricing and demand.  
In fact, Alcoa's CEO added a little color to China's stimulus efforts. He reported that China is telling its people "…that it's good to not have too much savings and to buy new cars and get a new air-conditioner." 

It would be ironic if China usurped the U.S. and became the world's consumer of last resort. And a profitable irony at that. 

*****It's being reported that stocks are rallying after weekly new unemployment claims were down sharply last week. But continued unemployment benefit claims from workers already on the dole rose for the week.

The drop in new claims appears to be an anomaly due to a break in layoffs in the auto industry. There doesn't appear to be any significant change in the unemployment trend.  

*****I hope you've been paying attention to Jason Cimpl's video chart analysis and weekly forecasts. He's been hitting the market's next moves with uncanny accuracy. You'll recall from last week, he was looking for more weakness early this week, with a recovery mid-week. If yesterday's late rebound can continue today, he'll be spot on again. Be sure to read tomorrow's Daily Profit to view Jason's forecast for next week.
 
And his prescient forecasts are making money for subscribers to TradeMaster Daily Stock Alerts, too. They just took 15% on the Ultrashort Financial ETF (NYSE:SKF) in 8 days. And it looks as though he's getting his readers ready for some upside trades.  
Of course, you'll get his video forecast in tomorrow's Daily Profit, but if you want to start getting his profitable trades, too, then you'll want to sign up for TradeMaster Daily Stock Alerts. There's a 30-day trial available. Click here to find out how you can enjoy steady profits in this uncertain market.

*****The PPIP is doomed. PIMCO's Bill Gross is dropping out of the government's program to remove toxic assets from banks' balance sheets. Gross and Co. are apparently concerned that the government has gotten too unpredictable, changing its mind, and even the terms, of other bailout measures retroactively.   

Plus, there's also the likelihood that banks won't sell toxic assets at anything resembling attractive prices. And that will kill the program.  

I still believe Geithner blew his opportunity to use the stress-tests to force banks to sell their toxic assets and improve their balance sheets. But as we know, Geithner simply does not play hardball. And that's too bad, because our economy could use some leadership from the Treasury.  

P.S. I just finished reading through a new book by senior trader Larry Connors. It's called "High Probability ETF Trading". It's on profitable trading strategies using ETFs and he's hitting a 93% win rate. I don't know about you, but I'll take 93% any day. He gave me a link to more information about the book to share with Daily Profit readers (I asked him for it as readers send me a ton of questions on ETFs). Click here to find out more about his book and discover how to get up a 93% win rate on your ETF trades.

Small caps are modestly rising this afternoon after large-cap benchmarks McDonald's (NYSE:MCD) and Procter & Gamble (NYSE:PG) lifted stocks from their morning descent. 

At 1:50 pm ET, the Russell 2000 (NYSE:IWM) was up 0.73%, the Dow was up 0.42% and the S&P 500 is 0.68% higher. 

Small caps on the move today include NxStage Medical Inc. (Nasdaq:NXTM), 30% higher after announcing a strategic business alliance with Asahi Kasei Kuraray Medical. Also on the rise are Pomeroy IT Solutions (Nasdaq:PMRY), up 28% after news broke the tech company would be acquired for $5.02 a share, and Internet Gold Golden Lines (Nasdaq:IGLD) is also 27% higher following a reported rise in Q1 profits. 

*****I was starting to think that Treasury Secretary Tim Geithner was secretly hoping that everyone had forgotten about his plan to remove toxic assets from bank balance sheets. But now he's out saying the Public-Private Investment Program (PPIP) should start in about six weeks. (Go ahead and mark your calendar now, in pencil, of course.) 

As you know, I'm not a big fan of Secretary Geithner. That's because, to me, he represents all that's wrong with how the government has dealt with the Wall Street banks, the likes of which nearly brought down our economy.  
He knew AIG (NYSE:AIG) was about to use TARP funds to pay bonuses and concluded there was nothing he could do. He knew AIG was about to pay Goldman Sachs (NYSE:GS) $12 billion out of TARP funds and again did nothing. He has consistently coddled the very companies that are in desperate need of tough love.  
And frankly, that's got me worried that Wall Street will go back to "business as usual" as soon as possible. Secretary Geithner has done nothing to stop it, and may even be encouraging a return to over-leverage by going to such great lengths to help these companies clean up their books.   

*****The big question surrounding the PPIP is how Secretary Geithner expects to get banks to sell their toxic assets. Banks believe these assets will regain value over time. And between government bailouts and stock sales (see Bank of America's (NYSE:BAC) $13.47 billion stock sale), banks are certainly going to operate under the assumption that they are well-enough capitalized to play the waiting game.  
It seems to me the "stress tests" were an ideal opportunity to force the banks to sell toxic assets. But Secretary Geithner chose to lob softballs, and now he has no leverage.  

Maybe he's got a plan. I sure hope so… 

*****As an investor and ruthless capitalist, I always look for profit opportunities in any situation. I might not like the outrageous stimulus spending coming from the government, but I'll darn well recommend the stocks that will benefit from government handouts. 

The PPIP is presenting a very nice profit opportunity for the companies that participate. That's because the Fed and Treasury will help finance-with your tax money, of course-any toxic asset sales. Companies that participate have an opportunity to make large profits with very little up front risk. It's a sweetheart deal, and I expect these stocks to move when investors realize what's going. I've prepared a Special Report on the subject and you can get it HERE. 

Despite opening lower this morning, small caps have shrugged off bad unemployment data and are trading higher this afternoon.

At 2:36 pm ET, the Russell 2000 (NYSE:IWM) is up 2.78% at 484.96, while the Dow is up 0.92% and the S&P 500 is up 1.42%.

Although stocks are higher today, they are still down sharply for the week, no thanks to new data out. Today the Labor Department reported that more workers filed last week for benefits than anticipated. New claims jumped to 637,000, much more than what was forecasted. The overall number of people seeking unemployment benefits grew faster than expected, increasing to 6.6 million, while continuing claims hit a 15th straight weekly record.

Small caps on the rise today include Gildan Activewear Inc. (NYSE:GIL), up 21% after announcing second-quarter results, and Forest City Enterprises (NYSE:FCY), up 18% after guiding in line.

*****The selling got serious yesterday. But once again, as TradeMaster technical analyst Jason Cimpl forecast, the dip was a buying opportunity. Stocks are up this morning as if nothing happened…

But of course, something did happen. Cracks in the rally are beginning to show. And economic data is starting to weaken. Consider this morning’s Producer Price Index (PPI). This popular measure of inflation on the wholesale level came in stronger than expected. Prices for food are ticking upward.

No doubt the Fed is relieved to see a little strength in prices, as overall, prices have dropped 3.7% over the last 12 months. The only thing that scares the Fed more than inflation is deflation.

My question is: at what point do rising prices motivate the Fed to start sopping up the flood of liquidity it has released over the last eight months? Clearly, there will have to be stronger signs of recovery, but with the potential for full employment numbers to be higher than they’ve historically been, I can’t help but be . . .

Stocks took another major tumble Monday after news that small-cap insurer American International Group (NYSE:AIG) clocked the biggest operating loss in its history, adding to investor despair. Some of today’s small-cap gainers were ICT Group (Nasdaq:ICTG), FGX International Holdings (Nasdaq:FGXI) and Noven Pharmaceuticals (Nasdaq:NOVN).

Other Market Watch highlights today included:

• The Russell 2000 (NYSE:IWM) closed down 21.22, or 5.45%, to 367.80, while the Dow closed down 4.24% to 6,763.29 and the S&P 500 closed down 4.66% to 700.82.
• For the year, the Russell 2000 is now down 26.35%, the Dow is down 22.95 and the S&P 500 is down 22.41%.
• On the data front today, personal spending rose about 0.6% in January and incomes rose 0.4%, while construction spending fell 3.3%, or more than twice as much as analysts predicted.
• Oil prices plummeted more than 10% today, suggesting energy demand is still being hurt by the deteriorating global economy.
• The U.S. government said it would give AIG another $30 billion in loans, on top of the $150 billion it has already provided to the insurer.
• Back to AIG, the insurer clocked $61.7 billion Q4 loss.
• Global stock markets sharply slumped overnight, with the benchmarks in Britain and Japan down about 4% each.

Small Cap Gainers:

• Business service outsourcer ICT Group, Inc. closed up 64% after Aegis Limited made an acquisition proposal to ICT’s board. See (Nasdaq:ICTG).
• FGX International Holdings Limited saw a 16% uptick following a strong sales and earning release late last week. See (Nasdaq:FGXI).
• Noven Pharmaceuticals is up 11% ahead of its scheduled earnings . . .

Stocks were sharply lower at midday on news this morning that small-cap insurer American International Group Inc. (NYSE:AIG) posted the largest quarterly loss in U.S. corporate history, down $61.7 billion in Q4.

At noon the Russell 2000 (NYSE:IWM) was down 15.25, or nearly 4%, at 373.77, while the S&P 500 was down 3.66% to 708.15, and the Dow was down 3.25% to a staggering 6,833.54 — the first time the index has dipped below 7,000 in 11 years.

Myriad data reports out today showed personal spending rose about 0.6% in January and incomes rose 0.4%, while construction spending fell 3.3%, or more than twice as much as analysts predicted. Even though manufacturing contracted in February for the thirteenth straight month, the pace was slower than expected.

Small caps bucking the downward trend this morning included business service outsourcer ICT Group, Inc. (Nasdaq:ICTG), up nearly 70% after Aegis Limited made an acquisition proposal to ICT’s board. FGX International Holdings Limited (Nasdaq:FGXI) is seeing an 18% uptick following a strong sales and earning release late last week, and Noven Pharmaceuticals is up 10% ahead of its scheduled earnings release on Thursday.

On the downside, Ship Finance International (NYSE:SFL) is down over 23% after reporting a Q4 loss last week.

A Caveman could do it

*****Warren Buffett’s annual report for Berkshire Hathaway was released over the weekend. His letter to his shareholders is one of the most widely read investment documents there is. Buffett’s down home charm, inviting sense of humor and investment savvy are always a great read...

Small-cap stocks tumbled on the open, pulled down by spillover selling from a decline in overseas markets fueled by a weak tone in financial and commodity shares. At 10:00 a.m. ET, the Russell 2000 (NYSE:IWM) was down 11.42, or 2.32%, at 481.69.

Slumping energy and commodity values already took a toll on overseas equities heading toward this morning’s opening. Shares in emerging market countries that are heavily dependent on energy exports — such as Russia and Dubai — were down as much as 9% overnight. Around the world, stock were off 3% in Japan, Hong Kong was down 4.7%, China off 1.1%, Taiwan down 2.1%, Australia off 3.5%, Singapore down 4.1%, South Korea off 2.1% and India down a whopping 6.6%.

As for the crude oil, the market for black gold was down about $2 a barrel into the U.S. stock market opening and briefly printed below $60. Copper, which is considered a key economic indicator, slipped 3% in London and aluminum producer and Dow component Alcoa Inc. (NYSE:AA) said that they were slashing output in this difficult demand environment.

This morning’s soft tone on commodities certainly is a quick turnabout from Monday morning, when commodity markets were in rally mode in Asia and Europe. If you’re wondering why Monday’s “great news” rally out of Asia on China’s announcement to implement a $586 billion stimulus plan, Northern Trust’s James Pressler penned a great piece on the news, questioning how much of the plan was actually “new” stimulus and just how the money to pay for the plan would be raised.

“Given the vagaries of how much real spending was in yesterday’s announcement, we are hesitant to significantly modify China’s growth forecasts upward or downplay the many risks facing the country’s struggling export economy and encumbered financial system,” Pressler said in an email. “However, we do feel that the uncertainties regarding how China will pay this bill will haunt global markets. If Beijing simply issues 4 trillion (yuan) in debt to cover its tab, then the long-term impact would be a manageable domestic issue. However, if it considers liquidating any of its many U.S.-backed assets or no longer buying as much of our debt, this New Deal . . .

Small-cap stocks jumped higher on the opening, lifted by news of a large fiscal stimulus plan out of China, and by a surge in commodity-related shares. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was up 5.81, or 1.15%, at 511.60.

China, which houses the world’s fourth-largest economy and which single-handedly accounted for 27% of global growth last year took an aggressive stance to stir up business activity, announcing plans for a fiscal stimulus package of $586 billion, primarily for infrastructure purposes. Traders saw the news as a good sign to help counter global slowing, and to perk up demand for commodities.

Crude oil prices were up nearly $4 a barrel, gold jumped 4% and copper prices surged about 8% overnight. BHP Billiton, the world’s largest mining company, soared some 13% ahead of the opening. In fact, metals and mining stocks were the top early performers today. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) was up 11%, while Titanium Metals Corp. (NYSE:TIE) was up 4.2% and Newmont Mining Corp. (NYSE:NEW) was up 6.3%

In a research report this morning, analysts at Goldman Sachs said the China stimulus plan was “a major measure that signals the government's commitment to address the gathering signs of economic weakness in China. While the total size of the stimulus is still unclear (the headline total appears to rely on a smaller federal government commitment and may include some spending that would have occurred anyway), there is no doubt that this is a large and positive step … as we have argued before, more aggressive stimulus outside the US is a necessary and welcome development in dealing with the current broad-based global slowdown. Alongside European monetary easing last week (and the United Kingdom's particularly large move), we seem to be heading more firmly in the right direction on this front.”

Financial shares got a lift from a G20 statement over the weekend saying that “coordinated” action was needed to fight the global financial crisis, which spurred hope for further central bank rate cuts around the world. Citigroup Inc. (NYSE:C) was up 3.3%, while JP Morgan Chase and Co. (NYSE:JPM) was up 1%.

Some traders were still debating the impact of last Friday’s employment . . .

Small-cap stocks are expected to open solidly higher, boosted by gains in equity markets around the world on news that China will roll out a $586 billion economic stimulus plan. Stock index futures were up about 2% in overnight trading, which suggests the Russell 2000 (NYSE:IWM) will open near 515.75.

Around the world overnight, China shares were up 7.4%, Japan’s Nikkei climbed 5.8%, Hong Kong was up 3.5%, India rallied 5.7%, Australia was up 1.3% and European shares were up about 2% heading toward the U.S. open.

Commodity markets – and commodity-themed stocks – were on a roll overnight, with BHP Billiton, the world’s largest mining company, jumping some 13%. Crude oil prices were up more than $4 a barrel, while copper prices climbed 8% in Asian trading.

Individual stocks in the news included American International Group (NYSE:AIG), which was up some 20% in pre-market trading on news that the government plans to add another $27 billion to the aid package for the embattled insurance giant and buy some $40 billion in preferred stock.

Also, President-elect Obama said that help for domestic automobile manufacturers was a “priority,” which sparked a rise in General Motors Corp. (NYSE:GM) and . . .

Small-cap stocks remained in a tailspin Thursday, pulled down by sloppy earnings, recession fears, persistent talk of rampant redemptions and sinking financial shares. The Russell 2000 (NYSE:IWM) closed down 12.05, or 2.40%, at 489.92, which marked the lowest daily close since September 2003. Small-cap stocks were especially punished today relative to the broad market and for the first time in months the Dow officially replaced the Russell 2000 as a better performing index for 2008. The Russell is down 36% for the year, while the Dow is off 34% and the S&P 500 is down 38%. As investors flee equities for cash, their appetite for riskier small-cap fare has fallen off the table amid a mentality that only the biggest and strongest firms are in a position to weather this downturn.

Now that we’ve got all the gloom out of the way, it should be noted that the market staged an impressive recovery move off the lows late in the session. The Dow actually rallied 2% today, and even though the Russell was down more than 2%, it was still more than 4% above the intraday low. More importantly, the strong rally off that intraday low left a potential double bottom on daily charts with the Oct. 10 bear market trough. If the market rallies away from this quickly, then it would provide an important successful test of the lows and would be one of the better bottoming signals we’ve seen on the charts.

Now, back to the sour news from today: American International Group (NYSE:AIG) CEO Edward Liddy said that the $112.8 billion bailout by the government “may not be enough” and the firm may need to tap into additional capital, which sent a collective groan through the financial markets.

The big negative elements in play today were the AIG comments, more talk of forced liquidation amid heavy redemptions, particularly in the leveraged loan market, Nick Kalivas, vice president of financial research with MF Global, said in an email interview. Kalivas also noted that commercial paper market was “plugged” and that earnings are lackluster as companies admit business isn’t going to get better any . . .

Small-cap stocks fell hard Wednesday, pulled down by safe haven flight away from anything perceived as “risky” in the wake of steep money market fund erosion, persistent fear about the health of financial stocks and worries that the government can only go so far to bail out this latest mess. The Russell 2000 (NYSE:IWM) closed down 34.27, or 4.82%, at 676.38, the lowest daily close since July 15. The small-cap benchmark is now down 12% for the year, while the Dow is off 20% in 2008 after sinking 4.06% Wednesday. Meanwhile, the S&P 500 unraveled 4.71% today and is down 21% for the year. The Russell closed below the 685 line, which marks a 20% decline off record highs that is considered an official bear market.

“There is dramatic concern over the health of the money market industry with the Reserve Primary Fund breaking $1 in NAV,” said Nick Kalivas, vice president of financial research with MF Global.

For years, investors have had a perception that there is absolutely no risk in money market funds. As one trader put it, “when the average Joe is all of a sudden worried about his savings, that’s when it’s Katie Bar the Door time.”

The Reserve Primary Fund had commercial paper exposure to Lehman, and if money market funds do not buy commercial paper for fear of default, it will be difficult for all companies to obtain financing, Kalivas said. “This would lead to slower economic growth, higher interest expense and weaker profits. The banking system is stressed, which will also make it difficult for companies to get credit,” he said.

The market is also in an agonizing position of trying to root out the next casualty of the credit crisis. American International Group (NYSE:AIG) was the latest in line after Bear Stearns, Fannie Mae, Freddie Mac and Lehman Brothers Holdings Inc. and now that AIG has been taken over by the government, investors aren’t that eager to wait for the next shoe to drop. Uncertainty and market stability have never been comfortable together. AIG was off another 45% today, and even stocks with positive earnings stories like Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) were unable to escape the wrath of the bears, sinking . . .

Small-cap stocks resumed the downdraft Wednesday morning, pulled down by lingering worries about the health of the financial system and a bleak report on the U.S. housing market. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 12.51, or 1.76%, at 698.14.

Housing starts in August tumbled to a rate of 895,000 units, which was well below the forecast of 950,000 and represented the weakest level in more than 17 years. Single-family home sales were off 1.9% to 630,000 units, also the lowest level since 1991, and even permits for new homes were at 17-year lows. The market was already in retreat mode ahead of the data, but certainly didn’t find any ray of sunshine in the latest look at the housing market.

Even before this morning’s housing report came out, the market was in a selling mood, as investors fretted about the never-ending credit crunch and where the next ax would fall. The government bailout of American International Group (NYSE:AIG) might have been a welcome sign fueling Tuesday’s recovery bounce, but the news seemed to have a fairly short bullish shelf life. Arguments on the bearish side of things center around the fact that if the government had to produce the bailout then it wasn’t that attractive of a safety move and also on to concerns that regulators clearly won’t be able step in to and rescue every firm that is listing toward default amid a mountain of bad debt write downs and other failed investment strategies.

Investors were once again nervous about taking on equity risk and money was clearly flowing back into credit instruments. The interest rate on benchmark 10-year notes tumbled 0.64% and bond yields were off 1.40% as money moved into . . .

News that the Federal Reserve confirmed it would authorize the Federal Reserve Bank of New York to lend up to $85 billion to American International Group Inc. (NYSE:AIG), which has faced mounting pressure this week related to huge losses on insurance for complex financial instruments and credit downgrades, has calmed global stock markets this morning. In return, the government will get a 79.9 percent stake in AIG and the ability to remove senior management.

Bailing out a private company, not related to U.S. backing, is an extraordinary and historic move for the Federal Reserve, whose primary roles include setting United States monetary policy and banking supervision and regulation. The Fed took the action under Section 13(3) of the Federal Reserve Act, which lays out the powers of Federal Reserve Banks. In a statement, the Fed said, “The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance.”

In spite of the positive news for AIG, shares of the insurer are trading 22% lower in pre-market trading. U.S. stock index futures have traded on both sides of the close in overnight trading, with the widely followed S&P 500 showing a range of 1.1% higher to 1.6% lower. Forty-five minutes before the opening, stock index futures are trading 1.50% lower.

In other markets crude oil rebounded from its largest two-day decline in four years rising some $3 per barrel to $94 in electronic trading. Other commodity markets are trading moderately higher this morning as well reversing the sharp liquidations seen on Monday and Tuesday. Global currency markets are showing little movement on either side of Tuesday’s closes.

At 8:30 a.m. (EDT) this morning the Commerce department released its report on monthly U.S. housing starts and permits. August housing starts fell . . .

Small-cap stocks staged a solid recovery rally Tuesday, climbing more than 4% off the morning low as investors turned off the panic switch on financial worries, while bargain hunters took a dive back into the market and short-sellers took profits. While that might not be the optimal scenario for stock market stability, it was still a welcome sign for a market that seemed to be teetering on the edge. For the day, the Russell 2000 (NYSE:IWM) was up 20.89, or 3.03%, at 710.65. Just one day after the worst performance of the year, the Russell mounted the best one-day gain since July 16, which underscores the manic volatility in play in equities right now.

After posting the largest one-day slide since the 9/11 attacks, the Dow pushed higher Tuesday, rising 1.30% and the S&P 500 was up 1.75%. For the year, the Dow is down 16.6%, the S&P 500 off 17.3% and the Russell down 7.2%.

The Federal Reserve decided not to cut short-term interest rates, even though the market gave the policy makers a green light to do so, pricing in overwhelming odds for a rate cut (via Fed funds futures) ahead of today’s FOMC policy meeting. Even though some might have been disappointed that the Fed didn’t come charging to the rescue with easier money, the market overall seemed satisfied that the policy body was ready to keep bullets in the holster for later should they be needed.

“The FOMC’s decision reflected their belief that it is not the cost of credit that is causing the current financial turmoil, but the availability of credit and liquidity,” Steven Wood, chief economist with Insight Economics, said in an email. “The Fed is trying to address this availability problem through the variety of liquidity facilities that they have put in place over the past 10 months. The Committee is clearly keeping a watchful eye on both the current financial turmoil and the increased downside risks to economic growth. Although inflation remains uncomfortably high, it has moved to the back burner given the immediacy of the financial and growth concerns. With inflation beginning to ease, and the economy in some difficulty, the Fed is now more likely to cut rates than raise them. We expect at least one rate reduction before . . .

Following the worst one-day point drop since the terrorist attacks of Sept. 11 and a lower opening, small caps are flickering in and out of the green, after news that the government might extend a lifeline to troubled insurance company AIG and ahead of the Fed’s policy decision this afternoon.

At 11:45 a.m. ET, the Russell 2000 (NYSE:IWM) was flat at 692.53, up 2.77, or 0.4%.

After turning AIG (NYSE:AIG) down Monday, the government is now reconsidering extending financial aid to the company, according to CNBC. Markets are watching the insurance juggernaut closely, as its fate remains uncertain and any potential failure would severely rock the financial system. The company must raise $75 billion today to remain afloat, which is on top of the $14.5 billion raised overnight to cover obligations in the wake of fresh rating agency credit downgrades. Shares remain down 50% midday. 

“My gut tells me that AIG will be rescued as it's not Lehman: $1 trillion in assets versus $629 billion,” Andy Busch, global foreign exchange strategist, said in an email. “More importantly, the insurance angle (lots of problems with an unwind) should be enough to get a package together.” 

Just one day after Lehman Brothers (NYSE:LEH) declared bankruptcy, the demolished U.S. investment bank is reportedly close to a deal with British bank Barclays, in which Barclays would acquire its U.S. broker-dealer unit for roughly $2 billion. Barclays, which initially walked away from a takeover deal over the weekend, has been looking to increase its exposure in the U.S. market.

Following the intense selling pressure Monday, the Federal Reserve aided liquidity levels in the market today by pumping $50 billion into the system. This is on top of the $20 billion the Federal Reserve Bank of New York was already slated . . .

After the worst one day point drop since the terrorist attacks of Sept. 11, small caps are lower this morning, as AIG’s (NYSE:AIG) fate remained uncertain and as investors surveyed the wreckage from Monday’s session.

At 9:45 a.m. ET, the Russell 2000 (NYSE:IWM) had fallen 5.85, or 0.85%, to 683.91.

Following one of the most cataclysmic days Wall Street has seen, investors’ focus has shifted to AIG from Merrill Lynch’s emergency sale to Bank of America (NYSE:BAC) and Lehman’s (NYSE:LEH) declaration of bankruptcy on Monday. The insurance juggernaut, which saw its stock plummet 61% on Monday on liquidity concerns, was forced to scramble to raise $14.5 billion overnight to cover obligations in the wake of fresh rating agency credit downgrades. The firm is seeking to raise $75 billion. Shares plunged 42%.

Just one day after Lehman Brothers declared bankruptcy, English bank Barclays’ interest has reemerged in the washed up bank’s core investment banking unit. Barclays, which initially walked away from a takeover deal over the weekend, has been looking to increase its exposure in the U.S. market.

In an effort to inject liquidity back into the markets, the Federal Reserve pumped $50 billion into the system. This is on top of the $20 billion the Federal Reserve Bank of New York was already slated to infuse the system with.

The Federal Reserve will meet today for a policy meeting, as the credit crisis has reached a climax. The central bank is expected to leave rates on hold, despite the market’s cries for a quarter point rate cut. The policy decision is . . .

Stocks extended Monday’s losses in overseas and pre-market trading on continued worries that American International Group Inc. (NYSE:AIG) will not be able to secure a capital infusion. Word on the street is that Goldman Sachs Group Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) are trying to arrange financing for AIG to plug a $70 billion financing gap. A failure to secure financing could lead to a bankruptcy filing by AIG as early as tomorrow.

U.S. stock index futures are down 0.5% to 1.5% in pre-market trading. Shares of energy producers are also weak this morning as the price of crude oil continues its decline, trading below $92 per barrel, down over $4 from Monday’s close and the lowest price level in seven months. Oil’s two-day decline is the steepest in over four years.

At 8:30 a.m. this morning the Aug. CPI report fell 0.1% compared with last month and rose 0.2% excluding food and energy. The report came out exactly as forecast and was overshadowed by the financial market turmoil.

Investors will be watching today’s earnings release by Goldman Sachs Group Inc. for further clues on the outlook for financial markets. And, at 2:15 p.m., the Fed announces its interest-rate decision in Washington. While a close call, Federal Reserve policy makers are expected to lower the target rate for overnight lending between banks by a quarter point to 1.75% while also signaling readiness to cut rates further if necessary to protect the nation’s economy from the current financial . . .

Small-cap stocks collapsed Monday, generating the largest one-day decline of the year as investors seemingly lost confidence in the financial arena and their wrath was felt throughout nearly every corporate endeavor in the country. The Russell 2000 (NYSE:IWM) shed 30.50, or 4.23%, to 689.76, the lowest daily close since mid-July.

Just a month ago, small caps came within a whisker of moving into positive territory for the year. Now, the Russell is down 9.9% for 2008, while the Dow is off 17.6% for the year after tumbling 4.4% Monday and the S&P 500 is down 18.7% on the year, while shedding 4.6% Monday.

The headline news this morning was that the nation’s fourth-largest investment bank, Lehman Brothers Holdings Inc. (NYSE:LEH), would declare bankruptcy as the firm simply could not raise enough capital to counter massive losses tied to the credit crisis. This time around, the Federal government decided to let Lehman’s fate be decided by true market forces rather than to step in for yet another taxpayer infused bailout of a financial firm. The realization that Uncle Sam’s pockets only run so deep for these institutions mired in mountains of bad debt jolted shares in major financial corporations. American International Group Inc. (NYSE:AIG) seems to have assumed the unenviable position of the next firm with a target on its back — sinking 56% today, adding to massive losses already pinned on the firm in recent weeks.

News that the second-largest bank — Bank of America Corp. (NYSE:BAC) — would purchase massive investment bank Merrill Lynch & Co. (NYSE:MER) for some $50 billion was good news to MER, which rallied some 4%, but not necessarily embraced by BAC shareholders as the bank’s shares slumped 19%.

This September swoon has to be making market watchers long for the days when the biggest worries centered on whether or not crude oil prices were going higher. If you would have predicted six weeks ago that the stock market would fall apart while crude oil was busy losing nearly 50% of it’s value, people would have thought you were nuts. Not only has that come to fruition, but today’s epic collapse took hold . . .

Small-cap stocks staged a dramatic opening slide, as the market nervously tried to price in news this weekend that Lehman Brothers Holdings Inc. (NYSE:LEH) filed for bankruptcy. At 10:04 a.m. ET, the Russell 2000 (NYSE:IWM) was down 14.57, or 2.02%, at 705.69.

The entire financial system was seemingly under fire as the LEH news became the latest casualty of the ongoing credit crunch. What made this go-around different than previous debacles at Bear Stearns and Fannie Mae (NYSE:FNM) is that the government was unwilling to once again bail out the firm in question, which forced LEH to announce the bankruptcy filing this weekend.

Despite these new storm clouds on the financial horizon, there was still some talk about the market making a “capitulation” low today. Some traders also noted that while a LEH bankruptcy might have been a worst-case scenario, it certainly isn’t that much of a shock given what took place at the firm last week. Also, news that Bank of America (NYSE:BAC) was buying Merrill Lynch & Co. Inc. (NYSE:MER) didn’t seem like bearish news (although the initial reaction from BAC shareholders wasn’t exactly a warm embrace as the stock tumbled 16% shortly after the open).

Another firm that was in the crosshairs of bears last week and remained on the hotseat this morning is American International Group Inc. (NYSE:AIG), as stock in the world’s largest insurer tumbled some 40% early today, after hitting the skids last week as well.

Even though the Treasury Department and Federal Reserve decided not to earmark taxpayer funds to bail out Lehman, central banks around the world were adding liquidity into the system to help the markets ride out this morning’s selling storm. This latest calamity adds even more zest to the FOMC policy meeting Tuesday afternoon — with some market watchers now wondering if a rate cut has gone . . .

Small-cap stocks are expected to open sharply lower this morning following the lead of Asian and European markets. U.S. stock index futures are down 2.5% to 3.5% in pre-market trading.

The weekend bankruptcy filing of U.S. investment bank Lehman Brothers Holding Inc. (NYSE:LEH) combined with the acquisition of Merrill Lynch & Co. (NYSE:MER) by Bank of America Corp. (NYSE:BAC) rattled global markets. Fears about the stability of other major financial institutions are widespread this morning. Many traders will be watching the stock of American International Group Inc. (NYSE:AIG), which is trading 40% lower in pre-market transactions. AIG tumbled after The New York Times reported the insurer asked the Fed for a $40 billion bridge loan. Speculation is widespread this morning that credit agencies may downgrade the debt of American International Group Inc. Over the weekend AIG rejected an offer from J.C Flowers & Co. that would have given the buyout firm an option to acquire the entire company.

Two-year Treasury notes fell below 2% for the first time since April on speculation the Federal Reserve will need to lower interest rates to bolster financial institutions battered by $514 billion of credit losses and asset write-downs from the subprime-mortgage market's collapse. Gold, up 2%, is one of the only commodity markets trading higher this morning. Oil is trading over $6 lower, while the dollar dropped the most in a decade against the yen and fell versus the euro, pound and . . .

Small-cap stocks edged higher Friday, waffling between support from commodity and industrial stocks and weakness from the financial arena (and curiously enough, restaurant stocks). The Russell 2000 (NYSE:IWM) closed up 1.27, or 0.18%, at 720.26. After what seemed like a frantic week of manic price swings, small caps finished out the entire week of trading with a miniscule gain of 0.18%. It was the kind of week that only a day trader with superlative entry and exit points could love.

The Dow closed out today’s action down 0.10% and is off 13.9% for 2008. Meanwhile, the S&P 500 was up 0.21% today and is down 14.7% for the year. Small caps so far in 2008 have been a relative refuge in a difficult year for the bulls, with the Russell off only 5.9% this year.

The combination of ongoing worries about the health of the financial system, weak retail sales, a profit warning by Chipotle Mexican Grill Inc. (NYSE:CMG) and cautious analyst comments on Apple Inc. (Nasdaq:AAPL) sparked worries about profit growth, Nick Kalivas, vice president of financial research with MF Global, said in an email interview.

Those concerns were offset, however, by strength in raw material stocks — a sector that was oversold after hedge funds aggressively liquidated holdings in the group recently, Kalivas said. In addition, a weak dollar provided some relief to commodity prices, as the euro currency surged 1.6% against the greenback, sparking a bounce in the Commodity Research Bureau Index, which jumped 1.4% to reverse steep recent declines. “Energy stocks are being helped by the fact that they were oversold. Moreover, there are worries about energy infrastructure right now, especially refining,” Kalivas said.

Crude oil prices rose just $0.31 a barrel today, closing U.S. trading at $101.18. The market was underpinned by concerns over Hurricane Ike, which is rapidly approaching the Texas Gulf Coast. There is some thought that the storm won’t wreak as much havoc on Gulf production as originally feared. However, gains in crude oil . . .

Small-cap stocks drifted into positive territory mid-morning, but slipped back into the red into midday action, with support from energy, homebuilder and commodity stocks offset by weakness in the financial arena. At 12:58 p.m. ET, the Russell 2000 (NYSE:IWM) was down 2.36, or 0.33%, at 716.63.

The market made a nice recovery off opening lows, but the move stalled out just above Thursday’s highs. It has been a volatile, churning weak for stocks, but right now the Russell is basically unchanged for the week despite several dramatic moves.

This morning’s latest batch of economic data served up a negative tilt, with retail sales coming in below expectations and the “core” inflation producer price index in line with the forecast. A sentiment survey later this morning was upbeat, which may have helped the market pull off the opening swoon. Still, the weekly claims report from Thursday was a negative, and today’s reports on spending and inflation certainly didn’t suggest any turnabout for a gloomy economic horizon.

The overall market continues to fret about the future of the nation’s fourth largest investment bank — Lehman Brothers Holdings Inc. (NYSE:LEH), which is openly courting suitors after a stunning collapse in market value this week. LEH was down another 15% below $4 a share at midday today, a jarring demise from the upper $40s in May. In addition, American International Group (NYSE:AIG), the world’s largest insurer, was reeling amid 26% declines today, keeping the entire financial . . .

Small-cap stocks took a dive on the opening, unable to sustain the upward momentum off Thursday afternoon’s surge as financial stocks were getting clobbered. Sloppy August retail sales took a toll on the market, but financial stocks were under stress even before the economic data came out this morning. On the bright side, commodity stocks were keeping index products from really sinking. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 6.21, or 0.86%, at 712.78.

The big news so far this morning was that August retail sales came in below expectations, with the headline figure at minus 0.3% when traders were looking for a rise of 0.2%. In addition, the figures for July were revised downward, which added to the sloppy tone. The PPI report came out at the same time this morning as retail sales, and the inflation picture was a little brighter than forecast, but the PPI was overshadowed by retail sales. In addition, the “core” rate on PPI was in line with expectations at 0.2%, so the overall decline of 0.9% that topped the minus 0.5% forecast was dulled because clearly energy prices have been on the decline.

The Michigan sentiment survey came in with a big surprise this morning, which helped stabilize stocks. The figure was at 73.1 in September — the highest reading in eight months and well above the forecast of 64. Meanwhile, the business inventory report came in at 1.1%, which was above the forecast of 0.5%.

Financial shares were once again a sore spot for the index products, as the market fretted over the future of Lehman Brothers Holdings Inc. (NYSE:LEH), especially on talk this morning that the government isn’t that eager to step in and bail out the nation’s fourth largest investment bank. LEH shares were down 17% shortly after the open. Other “name” financial shares in the glare this morning included American International Group Inc. (NYSE:AIG), which was down 18% at the lowest prices in more than a decade.

Crude oil price action will also be a focal point today as the market braces for Hurricane Ike to make landfall. Shortly after the open, crude oil futures were up about $1 a barrel. Also, other commodity markets were in rally mode as . . .

Small-cap stocks edged higher Thursday, shrugging off steep morning declines tied to the credit crisis as gains in commodity, manufacturing, transportation and tech stocks shifted focus away from the perilous financial landscape. In the end, the Russell 2000 (NYSE:IWM) closed up 1.83, or 0.26%, at 719.00; meanwhile, the Dow was up 1.46% and the S&P 500 was up 1.38%. For the year, small caps are still holding up much better than their big-cap brethren, with the Russell down 6.1%, the Dow off 13.8% and the S&P 500 down 14.9%.

At one point early this morning, the Russell was down more than 2% and appeared on the verge of a calamitous downside breach of key “figure” support along the 700 line. However, buyers came back into the market, braving not just fears about fragility in the financial arena, but also looking past a fresh batch of worrisome economic data as well. Tech stocks were clearly the early bedrock of the bulls, with the Nasdaq 100 never showing the kind of morning worries that seized other index products.

A key part of the mid-morning climb off those scary opening lows was yet another intriguing rally in commodity stocks, a rally that lately has defied price action in the physical market. However, as the day progressed, leadership on the buy-side shifted into the manufacturing, transportation and internet side of things. For the day, crude oil prices tumbled $1.71 a barrel to $100.87, while dipping to the lowest intraday point since April. In an interesting side note, the Commodity Futures Trading Commission today said that they could not say that speculators were to blame for the surge in oil prices this summer.

The sell-off in commodity markets was fairly broad in scope, pressured by a rise in the U.S. dollar, which made new multi-month highs against the euro, and 2 ½-year highs against the U.K.’s pound sterling. Normally, it would be convenient to highlight currency strength as a sign of international interest in U.S. assets, but the story appears to be primarily one of concern about global growth — particularly out . . .

Small-cap stocks recaptured the bulk of a steep morning slide as commodity stocks and tech stocks went into rally mode and financial shares trimmed losses amid hope that the ongoing calamity at Lehman Brothers Holdings Inc. (NYSE:LEH) would not widen into other an all-out financial meltdown. At 12:47 p.m. ET, the Russell 2000 (NYSE:IWM) was down 4.30, or 0.60% at 712.86, well off the morning low of 700.49.

Once again today we see a pattern of commodity stocks pulling up small-caps, even though physical commodity markets themselves are under pressure in line with a strong U.S. dollar and sinking crude oil prices. In addition, the decline in energy prices has been a supportive element for many sectors, particularly the airline industry. Crude oil prices tumbled some $1.50 dollars a barrel earlier, and the Commodity Research Bureau Index of 19 physical markets slipped to a seven-month low.

Looking at broad market sectors into the midday time frame, automobile manufacturers, oil refiners, railroads, fertilizers, homebuilders, steel, coal and tire stocks were all seeing significant gains, helping to stabilize equities after a bruising morning swoon. Tech stocks have been the best performers so far today, with the tech-laden Nasdaq 100 holding in positive territory even after the Dow and S&P 500 slipped back into the red. Small-caps tried to push into the green, but the move stalled as financials are still a sore spot for the market.

Looking at losing sectors right now, insurance firms are getting hammered. American International Group Inc. (NYSE:AIG) was still down some 12%. Also, investment banks and brokerage firms were getting sullied, with the big story on that . . .

Small-cap stocks plunged on the opening, pulled down by worries about the credit crisis, which are taking a toll on financial stocks. A fresh batch of economic data this morning did nothing to ease the pain as the labor market continues to struggle against a backdrop of worry about global growth slowing. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 15.27, or 2.13%, at 701.90.

Financial shares have continually been dogged by the credit crunch over the last year, and as soon as things seem to cool down on that front, a new crisis emerges. The latest poster child for the debt debacle is Lehman Brothers Holdings Inc. (NYSE:LEH), as the firm appears to be getting snowballed under losses, is struggling to raise capital via finding investors and has seen its debt swaps widen dramatically, which makes it more difficult to fund borrowing efforts. LEH debt is now trading near distressed levels and the stock was off a whopping 38% shortly after the opening, trading near $4.30, a far cry from the $66 level it was trading at back in February. Another firm reeling from the mortgage-tied credit crisis is Washington Mutual Inc. (NYSE:WM), which was off 21% early today. Also, American International Group Inc. (NYSE:AIG) was down 12%, as was Merrill Lynch & Co. Inc. (NYSE:MER).

On the data front this morning, the weekly unemployment claims release came in at 445,000, which was above the consensus forecast of 438,000. Perhaps more importantly than the headline figure was the continuing claims number, which was 3.52 million, near a 5-year peak. At the same time that the claims number came out, data on international trade showed a jump in the U.S. trade deficit to $62.2 billion, well above the forecast for a deficit of $58 billion. The dreary data simply added to an already bleak morning picture for equities. Even before this morning’s claims report, analysts at Goldman Sachs said earlier this week that the slumping U.S. labor market reflected an economy that was in recession, regardless of how the “official” . . .

Small-cap stocks rallied Monday, but most of the fireworks took place in the morning as the market awoke to news that government-sponsored enterprises Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) had been taken into conservator status by the government. There was an initial euphoria that pushed small-caps up some 3% in after-hours trading, but the market drifted well off the highs through midday as tech stocks continued to fret about the possibility of a global slowdown. An afternoon push in the final 30 minutes of trading helped lift the Russell 2000 (NYSE:IWM) to a gain of 14.01, or 1.95%, at 732.86; the small-cap benchmark is now down just 4.3% for the year. Meanwhile, the Dow was up 2.58% and the S&P 500 was up 2.05%. For 2008, the Dow is down 13.2% and the S&P 500 down 13.6%.

The market spent much of the day trying to decide if the Treasury Department’s takeover of Fannie Mae and Freddie Mac represented a long-term positive, or just a short-term stop-gap measure. Clearly, the outside world loved the news, as equity markets in Asia and Europe posted strong rallies overnight. There was a sense among investors that the government was basically forced to take this action, and that it would help pull some of the uncertainty out of the equation when it comes to trusting mortgage-related debt issues. Still, it’s a big leap from shoring up paper mortgage-backed securities debt to finding a bottom in the housing market slump.

In a research report earlier today, strategists at Goldman Sachs said that the GSE plan was a short-term bullish factor for equities and the U.S. dollar. “The move is consistent with the U.S. administration’s main aim to secure financial stability first, in the spirit of the Bear Stearns bailout in March and the declaration of the unusual and exigent circumstances by the Federal Reserve Board,” Goldman said . . .

Small-cap stocks are expected to open sharply higher, soaring in response to news over the weekend that the Treasury department will takeover operations at embattled government-sponsored enterprises Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). The Russell 2000 (NYSE:IWM)was up some 3% in after-hours trading, which would translate to an opening near 740, compared with Friday’s close just below 719.

Stock markets around the world embraced the GSE takeover news, with Japan up 3.3%, Hong Kong up 4.2%, Taiwan up 5.5%, Australia up 3.9%, Singapore up 4.4%, South Korea up 5.2% and India up 3.1%

Financial stocks truly took flight on the GSE plan, with the nation’s number one bank, Citigroup (NYSE:C) rising some 9%, while the number two bank, Bank of America (NYSE:BAC) was up 8%. Also, American International Group (NYSE:AIG), climbed some 10%, setting the tone for what should be a wild morning for financial sector shares. There are a bevy of small-cap and mid-cap financial companies that stand to benefit today from the wave of confidence stemming from the GSE bailout news.

The U.S. dollar also climbed on the news, although the move was much less dramatic than what was seen in equities. The dollar pushed to fresh move highs against the euro, and was up about 0.2% on that currency; meanwhile, the buck was up about 0.7% versus the yen.

Even with the dollar up and the stock market in major rally mode, crude oil . . .

Small-cap stocks started out the week with a thud, sinking hard and fast amid concerns about the relentless credit crisis and a potential slowdown in global growth. The Russell 2000 (NYSE:IWM) tumbled 17.06, or 2.31%, to 720.54, generating the largest one-day decline in about four weeks. The Russell is now down 5.93% for the year, while the Dow is down 14.1% after slipping 2.08% Monday. The S&P 500 lost 1.96% today and is off 13.7% for the year.

Financial stocks were once again bloodied, as investors are not confident in bank, brokerage or insurance shares amid slumping economic conditions and uncertainty about the extent of debt write-downs emanating from the mortgage and housing swoon. American International Group (NYSE:AIG) tumbled to 13-year lows today, sinking 5.7% on analyst downgrades, and other financial stocks were also pummeled. The up-and-down (mostly down) world at Lehman Brothers Holdings Inc. (NYSE:LEH) took a turn for the worse today as concerns were voiced about the proposed Korean buyer that emerged late last week. LEH slumped 11.2% on the talk. The Financial Select Sector SPDR Fund shed 3.3% and the PHLX KBW Banking Index was off 3.2%. Nearly every large name bank was in the red today, and that selling momentum spread easily into small-cap financial stocks as well.

Fresh data on the housing arena failed to instill confidence in the bulls that things were ready to improve. Even though the headline figure on existing home sales came in above the forecast (plus 3.1% versus plus 0.9%), there were still troubling elements in the report, included a record high supply of homes on the market and steep price declines from last year. The market will get more data on the housing picture with Tuesday morning’s Case-Shiller Home Price Index, and then later in the morning from the New Home Sales report.

Financials and the never-ending credit crisis weren’t the only worries facing investors today. Talk that the International Monetary Fund was lowering global growth projections was troubling for technology, small-cap and industrial names, and today’s index losses were paced by the tech-laden Nasdaq 100 and the Russell 2000. Within the tech sector, big firms like Apple Inc. (Nasdaq:AAPL) and Research in Motion Ltd. (Nasdaq:RIMM) lost 2.3% and 3.1%, respectively. On the industrial front, Caterpillar Inc. (NYSE:CAT) and 3M Company (NYSE:MMM) were . . .

Small-cap stocks went into a tailspin on the opening as runaway inflation, weak housing starts and the never-ending credit crunch saga cast a bearish pall over the market. At 9:55 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.53, or 1.15%, at 733.44.

The inflation horizon became more troubling this morning when the Producer Price Index report came out at 1.2%, which was way ahead of the forecast for a rise of 0.6%. The headline figure marked the largest year-over-year rise in 27 years. Recently, investors have tried to shrug off inflation worries, saying that the data is back-dated and that the biggest inflation ingredient — energy — has been on the decline in late July and in August. However, today’s “core” rate of inflation, which excludes food and energy prices, was up a stunning 0.7%, which was far beyond the forecast for a rise of 0.2%. The year-over-year rise in the core rate was the fastest since 1991. Although you can argue that tracking inflation without including energy and food prices is somewhat silly, one thing the core rate shows us today is that inflation is creeping into other areas than just at the gas pump and in the grocery sack.

Rubbing a little salt in the wound was the Housing Starts report, which came out at the same time as the PPI and which also was a disappointment. The headline for housing starts was down 11.0%, slack compared with the forecast for a decline of 9.9%. The rate of July housing starts was at 965,000 units, which marked the lowest level since March 1991. So, housing starts are at 17-year lows and inflation is at 27-year lows. With many market watchers saying that a recovery in the housing market is a necessary start to a recovery in the financial/credit crisis, the numbers today did nothing to help further the bullish argument.

“With sales still soft, and with lending standards tighter, single family housing starts will contract even further,” Steven Wood, chief economist with Insight Economics, said in an email. “Housing’s contribution to economic growth will be . . .

Small-cap stocks pushed higher in early trading, buoyed by a sharp rally in the U.S. dollar and a pullback in crude oil prices, which helped offset renews jitters about financial stocks after Thursday’s rout. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 7.46, or 1.05% at 720.87.

The market is on notice once again about the credit crunch after American International Group (NYSE:AIG) reported huge debt write downs Thursday. Financial shares were starting out on a weak note today as well, pulled down by sloppy results from Fannie Mae (NYSE:FNM) as the government-sponsored mortgage lender missed the forecast and slashed dividends. FNM shares were off 15% shortly after the open and its sister company Freddie Mac (NYSE:FRE) was down 5%. Financial stocks were pounded Thursday and could be on the defensive again ahead of the weekend. Bank of America Corp. (NYSE:BAC) was down 1.5% after an analyst downgrade.
 
The big story today is a dramatic rally in the U.S. dollar overnight, which exploded 1.5%, or more than 230 basis points against the euro. And although the extreme move versus the euro will capture the most attention, the greenback was busy flexing its muscles all over the world. For instance, the dollar made 17-month highs against the British pound, 11-month highs against the New Zealand kiwi, 12-month highs against the Canadian looney and 5-month highs against the Swiss franc...

Small-cap stocks are expected to open near steady levels as investors digest another bout of the credit crunch blues that emerged Thursday. However, a big rally in the U.S. dollar carries supportive elements that could counter those concerns today. The Russell 2000 (NYSE:IWM) was little changed in overnight trading, suggesting an open near 713.25.

The credit crunch came back into the spotlight Thursday after American International Group Inc. (NYSE:AIG) posted massive losses spurred by debt write downs. The big financial news so far this morning came from government-sponsored mortgage giant Fannie Mae (NYSE:FNM), which posted a big loss and announced it would slash dividends. FNM shares were off more than 10% during after-hours trading.

The productivity report this morning came in below expectations, with the headline number at 2.2%, vs. the forecast for 2.5%. The soft productivity release had very little immediate impact on the market, and the wholesale inventory data later this morning should be pretty much ignored by the trading community, which will leave the market free to focus on other issues outside of economic data.

The U.S. dollar took flight overnight, soaring a stunning 230 basis points, or 1.50% against the euro, reaching the highest point since late February against the eurozone currency. Around the world, demand for U.S. dollars was percolating, as the greenback hit a 1-year peak against the Canadian dollar, 11-month highs vs. the kiwi, 5-month highs against the Singapore dollar, 6-month highs vs. the Aussie, 5-month highs against the Swiss franc, and 17-month highs vs. the British pound. Normally, that kind of surge would reflect worldwide confidence about the U.S. economy and investments here, but in this case the move appeared to be powered by dovish comments from European Central Bank president Jean-Claude Trichet, which touched off fears about a worldwide economic slowdown...

Small-cap stocks reversed course Thursday, pulling back into the recent range as the credit crisis moved to the forefront, punishing financial stocks. The selling mood was also stirred by soft economic data and worries about consumer spending after sluggish sales at benchmark retailer Wal-Mart Stores (NYSE:WMT). In the end, the Russell 2000 (NYSE:IWM) shed 12.48, or 1.72%, to 713.42.

Large-cap financial stocks were getting hammered in the afternoon today, extending a gloom that began after Wednesday’s close when insurance giant American International Group (NYSE:AIG) reported hefty quarterly losses amid write-downs of bad mortgage loans. The whole mess with AIG rekindled fears about the credit crunch and investors dumped shares in a wide swath of financial names. AIG tumbled some 18% on the day. The nation’s top bank, Citigroup Inc. (NYSE:C) stumbled amid news that the firm would buy back some $7 billion in auction-rate securities and pay a $100 million civil fine to settle a suit that it misled investors on the risk of the investments. Citigroup lost about 6% on the day. Merrill Lynch & Co. (NYSE:MER) lost 8%, Lehman Bros. Holdings, Inc. (NYSE:LEH) tumbled 13%, JP Morgan Chase Co. (NYSE:JPM) was down 4% and mortgage finance firms Fannie Mae (NSE:FNM) and Freddie Mac (NYSE:FRE) were down 14% and 9%, respectively. The Financial Select SPDR was down 5%--and it’s not as if those declines are limited to the large-cap banks and brokerage houses. There are dozens of small- and mid-cap banks out there, and they have even more trouble accessing credit during the crunch than the big firms.

As you might expect...

After swooning out of the gate, the Russell 2000 has pulled off its lows of the session, but still remains besieged in the red mid-session. A spike in unemployment claims, disconcerting July retail sales, an uptick in oil prices and gloomy results from insurance juggernaut American Insurance Group (NYSE:AIG) pushed small caps lower, while a better-than-expected pending home sales report served to taper losses.

At 12:41 p.m. ET, the Russell 2000 (NYSE:IWM) had slipped 4.67, or 0.64% to 721.23, while the Dow has given back 94.93, or 0.81%, to 11,561.14.

The Labor Department reported this morning that the weekly claims report spiked to 455,000, marking the largest weekly figure since March 2002. Adding insult to injury, the number was substantially above the forecast of 420,000 and adds to the sobering picture of a weaker labor market. The continuing claims number rose to a fresh cycle high at 3.311 million, the highest level since December 2003.

“Continuing claims, which are inversely related to job creation, jumped this week to their highest level since December 2003,” Steven Wood, chief economist with Insight Economics, said in an email. “This is an indication that hiring has weakened.”

In other economic news, the National Association of Realtors reported this morning that pending home sales rose 5.3% to 89 from May’s reduced figure of 84.5. Economists were expecting the index to slide to 84.3. The rosier-than-anticipated report helped to pull stocks off their lows of the session. However, despite a gain during June, the number is still 12% lower than last year.

Small-cap stocks opened lower, succumbing to a series of bad news events overnight, including massive quarterly losses at insurance firm American Insurance Group (NYSE:AIG), disappointing sales at discount giant Wal-Mart Stores Inc. (NYSE:WMT), a bounce in crude oil prices and sobering economic data on the jobs front. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 6.09, or 0.84% at 719.80.

The market was already on the defensive ahead of the weekly claims report this morning and when unemployment filings topped the forecast, it generated another leg down in futures ahead of the regular opening. Weekly claims were pegged at 455,000, which marked the largest weekly figure since March 2002. What’s more, the number was well above the forecast of 420,000 and simply adds another layer to ongoing concerns about the labor market. The continuing claims number rose to a fresh cycle high at 3.311 million. The Labor Department said that claims were goosed by a program to extend benefits, but it’s not exactly like the people who need an extension have found a job yet.

“Continuing claims, which are inversely related to job creation, jumped this week to their highest level since December 2003,” Steven Wood, chief economist with Insight Economics, said in an email. “This is an indication that hiring has weakened,” he said.

The pending home sales report, which came out at 10:00 a.m. ET, was up 5.3% and appeared to have limited impact on the market. Even with a gain during June, the number was still down 12% from last year...

The Russell 2000 (NYSE:IWM) is expected to open lower, pulled down by disappointing same-store sales from Wal-Mart Stores Inc. (NYSE:WMT), huge quarterly losses by insurance giant American Insurance Group (NYSE:AIG), troubling weekly unemployment claims and a jump in crude oil prices overnight. The Russell 2000 was down about 0.5% in after-hours trading, suggesting an open today near 721.50.

The weekly claims report came in at 455,000, which was well above the forecast for a decline to 420,000. The 4-week moving average for claims shot to 419,500 and continued claims are at 3.311 million. The recent surge in claims provides a troubling picture of the labor market, and undercuts hopes for economic recovery.

There was an expectation ahead of the July same-store sales reports that discounters like Wal-Mart and Costco (Nasdaq:COST) would outperform more expensive fare from the big department stores as we approach the “back-to-school” sales push. However, if WMT struggles, it sets a nervous tone for the entire group. It should be noted that COST did beat the forecast for sales, which takes a little of the edge off WMT’s disappointment...

Small-cap stocks edged lower Monday, pulled down by nagging concerns linked to the ongoing credit crunch, which weigh on small-cap financial institutions and by a record high crude oil prices. The Russell 2000 (NYSE:IWM) dipped 8.48, or 1.21%, to 689.66, generating the lowest daily close for the Russell since April 15.

Despite 10-week closing lows, price action today in small caps was relatively sleepy, with the Russell 2000 contained to an eight-handle range, compared with a 20-handle range last Thursday.

When the market opened this morning, equities were alarmed at a new record high in crude oil prices, which rose above $143 dollars a barrel overnight amid tensions between Israel and Iraq. However, crude oil was unable to sustain those new highs and actually dipped briefly into negative territory in the afternoon, leaving a potential bearish topping signal on daily charts that allowed stock market investors a little breathing room. Also on the commodities scene, gold prices pulled back today, and corn futures plunged down the daily trading limit.

Earlier this morning, the Chicago PMI headline figure came in at 49.6, which was a much better showing than the median forecast for a reading of 48. Still, the number was below the 50 contraction line for the fifth consecutive month, which underscores a soft picture in the Midwest manufacturing scene. The Chicago data was just the first of several manufacturing-oriented reports this week, but the big economic report comes Thursday morning with the monthly employment release.

For the first time in quite awhile, the Dow rallied in the face of declines in small-cap stocks. The Dow has been in collapse mode of late, sinking to 2-year lows even though the Russell 2000 was still well above the March 2008 bottom. The Dow benefited today from gains in a couple of oil company shares and from a rise in Wal-Mart (NYSE:WMT), which stands to hold up better than high-end retailers . . .

It’s been a volatile morning for small caps and the roller coaster ride continues mid-session, as crude surges and investors grapple with conflicting economic reports and question consumer resilience.

On the heels of Thursday’s violent sell off, at 12:46 p.m. ET, the Russell 2000 (NYSE:IWM) has slipped 2.98, or 0.43%, at 695.44., while the Dow is off 77.19, 0.67%, to 11,376.23.

After gushing to a new record high of more than $142 a barrel in pre-market trading, crude oil has deflated somewhat, but still remains in the green mid-session. Today’s assent comes after crude surged nearly 4% on Thursday, as investors found comfort in commodities and away from free-falling equities. The dollar is mixed against the yen and the euro, while gold has climbed $13 midday.

In economic news, consumer confidence fell to a 28-year low, adding to the bleak sentiment on Wall Street. The Michigan sentiment survey slipped to 56.4, slightly below the forecast of 57, as consumers continue to feel discouraged by rising oil and food prices and job losses. The report also said that the velocity of consumer spending is expected to decline through the beginning of 2009.

On a brighter note, the Commerce Department reported this morning that personal income jumped 1.9%, substantially above the projected rise of 0.4%; while spending rose 0.8% in May, also above the forecasted increase of 0.7%. However, when discounting the impact of government issued tax stimulus checks; real income was up only 0.4%.

“Real consumer spending jumped in May, boosted by the tax stimulus checks,” Steven Wood, chief economist with Insight Economics, said in an email. “This will allow consumer spending to rebound and keep Q2 growth positive (albeit weak). After the rebate checks are spent, ongoing job losses will weaken income growth, slow consumer spending and dampen economic growth during the second half of the year. Eventually, weak economic growth will dampen inflation — at least that’s . . .