Tag - LEH

Small-cap stocks edged lower Friday, pulled down by the logjam in Washington as lawmakers were at loggerheads longer than expected putting together a rescue plan for the embattled financial arena. Still, a rally in the final hour of trading pared losses for small caps, and lifted the Dow into a solid gain. The Russell 2000 (NYSE:IWM) closed down 0.94, or 0.13% at 704.80 and is now down 7.9% for the year. Meanwhile, the Dow was up 1.10% Friday and is now off 15.9% for 2008; the S&P 500 was up 0.34% Friday and had slipped 17.3% so far this year.

The largest bank failure in history became official overnight as Washington Mutual Inc. (NYSE:WM) was seized by regulators and sold for $1.9 billion to JP Morgan Chase & Co. (NYSE:JPM). JPM shares rallied nicely on the news, gaining some 10% on the day. Normally, one would expect the largest bank failure in history to dominate the news landscape, but WaMu’s failure wasn’t all that much of a surprise, and stock in the company was already trading well below $2 coming into the session.

As for Washington’s $700-billion-dollar bailout of Wall Street, the “Paulson Plan” ran into more resistance than expected, especially from the Republican party. Although uncertainty about the final plan kept investors on edge, there seems little doubt that something will still be worked out fairly quickly — probably over the weekend.

The story within stocks for much of the day centered on the tech arena, with tech stocks taking a beating until the final hour of the session. Even the late rally still found the tech-laden Nasdaq 100 slipping 0.92% for the day. Within the tech front, key stocks like Research in Motion Ltd. (Nasdaq:RIMM) were taking a pounding; RIMM shares were off some 27% as the makers of the Blackberry warned that profits would miss the forecast. Also within techs, Apple Inc. (Nasdaq:AAPL) was off about 2.8%. There has been a hope building that passage of a financial rescue plan . . .

Lehman Brothers Holdings Inc.'s (NYSE:LEH) announcement early Monday of plans to file for Chapter 11 bankruptcy capped off a roller-coaster weekend on Wall Street that saw already shaken U.S. markets rattle further due to woes at other major financial firms and the federal government takeover of beleaguered mortgage financiers Fannie Mae and Freddie Mac.

Strangled by the subprime crisis and plunging real-estate values, the storied investment banking titan collapsed under the weight of $60 billion in bad debts on its property holdings. The fall of the venerable 158-year-old Wall Street institution marks the beginning of the largest corporate bankruptcy case in U.S. history, based on total assets before the filing ($639 billion as of May 31).

Much like the Enron bankruptcy in 2001, Lehman Brother's crash-and-burn not only permanently reshapes the American financial landscape, it is already causing a ripple effect that is sending shudders through global markets. In wake of the news, the Dow Jones Industrial Average tumbled over 500 points, Chinese share prices closed sharply lower, Hong Kong stocks nosedived to their lowest level since Oct. 27, 2006, and the Shanghai composite dipped below its psychologically important 2,000 level — amid fears that the bankruptcy would stoke further troubles in the United States financial sector.

Asian governments closed the doors of Lehman’s operations from Tokyo to Seoul in an effort to reassure investors that effects on regional companies with exposure to the bank would be limited. The Bank of Japan pumped 2.5 trillion yen, or $24 billion, into Japanese money markets, Taiwan's central bank infused the foreign-currency interbank market with $3.59 billion, and the chief of the Hong Kong Monetary Authority told the local media of plans to make a similar move to help give the . . .

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 . . .

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 . . .

After opening sharply lower, small caps continue to be rattled by Lehman Brothers’ weekend bankruptcy filing, Bank of America’s (NYSE:BAC) surprise acquisition of Merrill Lynch (NYSE:MER) and AIG’s unstable liquidity position. 

At 12:00 p.m. ET all indices remained in the red, though the Russell 2000 has come off its session lows. The small-cap index is down 14.12 or 1.96%, to 706.14, the Dow plunged 302.64, or 2.65%, to 11,119.35 and the tech laden Nasdaq fell 31.36, or 1.62%, to 2,224.67.

Financial jitters remain off the charts as stocks crumbled in light of the Federal Reserve’s decision to allow investment bank Lehman Brothers (NYSE:LEH) to fail. After a drawn out uphill battle against overexposure to subprime loans and a 94% plunge in share price this year, Lehman Brothers will close its doors.

“The U.S. government can’t and should not bail out every large financial institution that’s out there,” said BMO Capital’s Andy Busch. “Lehman had a lot of time to do everything in their power to show that this didn’t happen and they made the decision not to. The United States made the right decision not to be involved with that. At some point they needed to make the critical decision to do something like this … this doesn’t necessarily mean it’s a bottom to be formed for financial stocks, though it certainly takes us one step closer to that point. The ultimate harbinger is when housing prices end up bottoming.”

In line with Bank of America’s (NYSE:BAC) historical strategy, the financial services goliath bought strained, 94-year old Merrill Lynch for $50 billion in a surprise transaction over the weekend. The addition of Merrill gives the Charlotte, N.C.-based bank exposure to roughly every slice of the financial services industry. Shares of Merrill bolted 19% midday, while Bank of America's shares sold off 16%.

The future of Merrill and Lehman’s employees remains undecided. “The biggest losers in all this are the employees of Lehman, people who had had their life . . .

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 are expected to open lower, pulled down by soft August retail sales and a downward revision to July numbers. The Russell 2000 (NYSE:IWM) was expected to start the day about 0.4% lower, which would translate to an open near 716.

The retail sales report was at minus 0.3%, which was softer than the forecast for a rise of 0.2%. In addition, last month’s figure was revised downward to minus 0.5%, compared with the reported figure of minus 0.1%. The immediate market response was that S&P 500 futures tacked on three more handles to the downside and the dollar weakened against the euro.

At the same time that the weak retail sales report was released, the PPI report came in at minus 0.9%, which was better than the consensus projection for a drop of 0.5%. The “core” rate, which excludes food and energy prices, came in at 0.2%, which was in line with expectations.

The market still will receive data on business inventories and the Michigan sentiment survey at 10:00 a.m. ET, but those reports typically would be overshadowed by the retail sales/PPI tandem.

Ahead of the open, crude oil prices were up about $1 a barrel toward $102, with traders leery of being short ahead of the landfall for Hurricane Ike. However, if Ike doesn’t damage facilities, there could be a Gustav-like slide in energy prices come Monday morning, especially with Saudi Arabia saying that they don’t plan . . .

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 are poised for a steep opening slide to open the 7th anniversary of the 9/11 attacks, pressured by renewed concerns over the ongoing credit crisis and jitters about a potential world economic slowdown. An index of global stocks tumbled to 14-month lows overnight. The Russell 2000 (NYSE:IWM) was off about 1.3% in after-hours trade, which suggests an open near 708.

The weekly claims report this morning came in at 445,000, which was above the forecast of 438,000. Continuing claims rose to 3.52 million, which is the highest since October 2003. The market was not happy with these numbers, with S&P 500 futures tacking another two handles to the downside after the release.

At the same time claims were released this morning, the international trade report showed a deficit of $62.2 billion, which was above the projection of $58 billion. The immediate response was that overnight gains in the dollar versus the euro were dramatically trimmed. Ahead of the trade data, the dollar was steamrolling the euro, as the euro/dollar pair snapped 1.3900 for the first time since September 2007. In addition, the dollar jumped to the highest point against the U.K.’s pound in more than years. Even though the dollar was down against the yen, the overall dollar index was higher; still, the strong greenback wasn’t enough to bolster stocks.

The strong dollar pulled down commodities, with crude oil prices in London slipping to six-month lows. U.S. crude markets were down about $0.30 a barrel, near $102.20 and gold was hovering just above 11-month lows.

Lehman Brothers Holdings Inc. (NYSE:LEH) was getting clobbered again in overnight trading, tumbling some 40%, which serves as the most recent . . .

Small-cap stocks pushed higher early Wednesday, trying to recapture some of the huge losses from Tuesday’s collapse, which was powered by sinking financial, homebuilder and commodity shares. Financial shares were still on wobbly footing this morning, but commodity stocks were rising nicely. At 9:56 a.m. ET, the Russell 2000 (NYSE:IWM) was up 9.23, or 1.30%, at 716.52.

In the wake of Tuesday’s collapse, which marked the largest one-day swoon of 2008, traders were keeping a close eye on trading in Lehman Brothers Holdings Inc. (NYSE:LEH), which released earnings under fire ahead of the opening after sinking more than 40% Tuesday. LEH, then nation’s fourth-largest investment bank, confirmed they were shopping prized assets in an effort to raise capital. The swirl of fear encompassing LEH seemed to calm somewhat this morning, with LEH shares bouncing back and forth near steady levels shortly after the open.

Well ahead of the opening, the MBA mortgage applications index jumped 9.5%, boosted by a decline in the 30-year fixed mortgage rate, which dipped to 6.06% from 6.39% the previous week. The market is basically economic indicator free today, ahead of Thursday’s weekly claims report and Friday’s PPI/retail sales tandem, which could set the tone for the finish to what has already been a wild week for stocks. Speaking of economic indicators, in a research report this morning, Goldman Sachs said that last Friday’s weak employment report “Closes the argument when it comes to whether or not the economy is in recession — it is.”

As recession talk in America picks up steam once again, it coincides with concerns that the global economy is also slowing, which has been blamed for some of the recent downdraft in commodity prices. In addition, some hedge funds that were long commodity stocks have been unraveling those trades, exacerbating the move. On the commodity front this morning, crude oil prices climbed back into positive territory into the stock market opening, rising about 90 cents a barrel back above $104. OPEC leaders surprised energy market watchers by deciding to trim output by 500,000 barrels a day at their meeting in Vienna Tuesday, which provides some support to energy prices. Stabilizing energy values however, represents a double-edged sword for equities; while it might support falling commodity names, it also thwarts . . .

Small-cap stocks were expected to open flat to slightly higher Wednesday morning as the market digests Tuesday’s collapse, which registered as the largest one-day downdraft of the year. The Russell 2000 (NYSE:IWM) was up about 0.2% in after-hours trading, which would suggest an open near 708.60.

Stocks index futures price direction was choppy in after-hours trading with the Dow and S&P 500 slipping into negative territory, then bouncing back after trading higher much of the night. Nasdaq futures were up about 0.5%. Stock markets around the world were mixed to lower overnight, with Japan off 0.4%, Hong Kong down 2.4%, Australia down 1.5%, Singapore down 1.9%, India down 1.6%, China up 0.1%, South Korea up 0.8% and Taiwan up 0.5%.

A big part of the story during Tuesday’s collapse was an unraveling of Lehman Brothers Holdings Inc. (NYSE:LEH), as LEH shares tumbled some 44% and triggered a wave of selling throughout the financial landscape. This morning LEH released earnings, which were awful, but the market was already expecting awful news anyhow. LEH confirmed they were planning to sell off prized assets to raise capital, as the fourth-largest U.S. investment bank posted losses nearing $4 billion for the quarter. LEH shares were turning higher ahead of the open.

Crude oil prices tipped lower, slipping about $0.30 a barrel toward the $103 zone. The market spent much of the overnight session on a mild rally after OPEC surprised the market by voting to cut production 500,000 barrels a day in response to the recent slide in prices. The temporary bump in energy prices helped lift gold off 11-month lows that were set in Asian trading. The U.S. dollar was firm against the euro . . .

Small-cap stocks fell hard Tuesday, completely wiping out Monday’s GSE-takeover advance as investors fretted about the overall state of financial companies. In addition, money also flowed out of homebuilding stocks and commodity names as traders searched for a safe-haven in credit markets. In the end, the Russell 2000 (NYSE:IWM) shed 25.57, or 3.49%, to 707.29, notching the largest one-day decline of the year by the time the dust settled. The small-cap benchmark is now down 7.6% for the year.

Although losses in the Dow today were less extreme than in the Russell 2000, sellers still were in control, with the Dow off 2.43% for the day, and down 15.3% on the year. Over in the S&P 500, the market tumbled 3.41% today and is off 16.6% for 2008.

“The GSE takeover was basically a band-aid on a gaping wound,” James Comiskey, senior market strategist with Lind-Waldock, said in a phone interview. When the Lehman meltdown took place this morning, it showed that there are systemic risks in the financial system that go beyond just bailing out mortgage underwriters. And it also brings up the question of just how many times the government can try to rescue these firms that are bleeding money from terrible business decisions, Comiskey said.

The “Lehman meltdown” Comiskey referred to was Lehman Brothers Holdings Inc. (NYSE:LEH), which collapsed 44% today amid fears that the firm was hitting a wall in raising capital to shore up losses tied to the mortgage/credit crisis. As LEH shares plummeted, Standard & Poors rating agency said it may slice Lehman’s credit rating. The rout in LEH shares simply stoked selling throughout the financial arena, with the Financial Select Sector SPDR Fund sinking 6.3%. “When the banks are throwing knives in each other’s backs, things are bloody. It makes the GSE takeover . . .

Small-cap stocks pushed lower into mid-session activity as financial stocks, homebuilder shares and commodity themes cast a pall over the GSE euphoria that dominated investor psychology Monday. The Russell is now back below the opening gush fueled by Monday’s warm embrace of the GSE takeover. At 12:42 p.m. ET, the Russell 2000 (NYSE:IWM) was down 6.92, or 0.94%, at 725.94.

Within the financial arena, shares of Lehman Brothers Holdings Inc. (NYSE:LEH) were in freefall mode, collapsing more than 30% amid concerns that the financial services firm was struggling to raise needed capital and that potential investors have pulled out of the process. Lehman denied comment on the share collapse, as did government regulators.

Commodity stocks were getting pummeled, with oil plunging to five-month lows as Hurricane Ike appears to be shifting course south away from the key energy production zones. In addition, OPEC leaders are expected to keep output levels unchanged at their meeting in Vienna, which is going on today. Among broad market sectors, steel, coal and oil exploration stocks were some of the worst performers.

Money flow also appeared to dent upside momentum in stocks, with Treasury products absolutely soaring. The yield on the benchmark 10-year note was down 2.3% in midday action, and appeared to be on course for the lowest close since early April. Yields move inversely to price in credit instruments, which means strong demand for Treasury investments was boosting the price and lowering the yield. That type of action in tandem with sinking equities typically reflects investor safe-haven . . .

Small-cap stocks remained solidly higher into mid-session trading, but the morning euphoria sparked by the Treasury Department takeover of government-sponsored enterprises (GSE) was losing steam as tech stocks failed to join the party. At 12:42 p.m. ET, the Russell 2000 (NYSE:IWM) was up 9.27, or 1.29%, at 728.12, but well below the morning peak just shy of 740.

Tech shares slipped into the red, pulling down other index products as investors in tech stocks remain concerned that a global slowdown will curb spending on technology and curb investor appetite for the latest, greatest cell phone and personal computer gadgets. In addition to the slide in tech stocks, thrifts were getting absolutely hammered as the market basically gives up hope that preferred stock holders in Fannie Mae (NYSE:FNM) or Freddie Mac (NYSE:FRE) will get anything back, as the Treasury’s takeover appears to be focused on the credit side of things. Still, optimism about the GSE news provided a lift to homebuilding stocks and home furnishing stocks on ideas that it could help put a bottom in the slumping housing market. Also, financial stocks were boosted by ideas their exposure to debt through the GSEs would now be much more secure.

Some of the upside momentum in financial shares was stalled by a big slide in Lehman Brothers Holdings Inc. (NYSE:LEH), which was spooked by fears that valuable firm assets would be sold off at fire sale prices. LEH shares were down some 18%.

In addition to thrifts, coal stocks were getting pounded again today, a theme that has been repeated often in recent days following news that hedge funds with commodity stock ties have been liquidating. Also, steel, mining, aluminum and fertilizer . . .

Small-cap stocks closed higher Friday, finishing off a volatile week on a “good news/bad news” tilt as concerns about global growth and slumping labor markets in the United States took a toll for the week, but didn’t stop an impressive recovery for the day Friday. The big news today was that the unemployment rate in America jumped to 6.1%, which marked the highest level in nearly five years. The Russell 2000 (NYSE:IWM) closed up 0.23, or 0.03%, at 718.95 and is now down 6.1% for the year.  For the week, the Russell was down 2.8%. Meanwhile, the Dow was up 0.29% for the day and is down 15.4% for 2008, while the S&P 500 was up 0.44% Friday and now 15.3% lower for the year.

Despite the preponderance of bearish news on the data front this morning, the stock market staged a fairly heroic comeback from the morning lows, powered by a recovery in financial shares, which have beaten down in recent weeks and months. The PHLX KBW Banking Index rallied 4.1%, and the Financial Select Sector SPDR Index rose 2.8%, while key stocks like Citigroup Inc. (NYSE:C), Lehman Brothers Holdings Inc. (NYSE:LEH) and Bank of America Corp. (NYSE:BAC) all posted gains of 4% or more. Even investment banking firm Merrill Lynch & Co. Inc. (NYSE:MER) generated an impressive recovery from the morning lows despite suffering an analyst downgrade by rival Goldman Sachs.

The highly anticipated monthly employment report projected an ugly picture of the labor market, no matter how anyone might try to spin the numbers. Most market watchers were looking for the jobless rate to hold steady in August at 5.7%, or perhaps tick up to 5.8% at the worst … but soaring above 6% was a sobering thought for all. In addition to the dreary jobless news, the headline figure on non-farm payrolls tumbled 84,000 jobs, which was a tad below the forecast for a loss of 71,000 jobs.

“So far this year, 605,000 jobs have been lost. The economy has clearly slipped into a jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy,” Steven Wood, chief economist with Insight Economics, said in an email. “Over the past year, the number of unemployed people has increased by more than 2.24 million and the unemployment rate has increased by 1.4 percentage point. In the post World War II period, every time the unemployment rate . . .

Small-cap stocks waffled back and forth near steady levels into midday, with support from lower crude oil prices and a firm U.S. dollar countered by slumping technology stocks and worries about a global economic slowdown. At 12:48 p.m. ET, the Russell 2000 (NYSE:IWM) was up 1.20, or 0.16% at 739.70.

The Russell was holding up much better than other large-cap indices. The tech-laden Nasdaq 100 was down 1.3%, with key stocks like Intel Corp. (Nasdaq:INTC) and International Business Machines (NYSE:IBM) both generating sizable declines. INTC was off about 4% and IBM down about 2.5%.

In the lunchtime frame, Boston Federal Reserve Bank President Eric Rosengren said that the impact of rate cuts has been minimized by the credit crunch and he cautioned that the economy could slow down in the second half of 2008 and that the unemployment rate could surge beyond 6%. His comments seemed to have a much more dovish tone than recent Fed speak from Richard Fisher of the Dallas Fed and Jeffrey Lacker from the Richmond Fed.

Commodity names and tech stocks dominated the losing trends so far today, with coal, metals and mining, gold, semiconductors and semiconductor equipment among the biggest losing sectors. On the upside, healthcare facilities and airlines were doing well, with the latter boosted by the recent reprieve on the jet fuel front.

There were still some lingering jitters about a large hedge fund shutting down overnight. The fund, Ospraie Management LLC, had some $2.8 billion under management and reportedly has losing large sums of money on various commodity-tied equity investments. There are concerns that other hedge funds could be in a precarious position as well as the market unwinds the short dollar/long commodity trade. In the case of Ospraie, Lehman Brothers Holdings Inc. (NYSE:LEH) held a 20% stake in the hedge fund, but LEH shares were holding up reasonably . . .

Small-cap stocks turned higher shortly after the opening, underpinned by a decline in crude oil prices, which helped offset some overnight concerns about the closure of a large hedge fund. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.66, or 0.50%, at 742.16.

The factory orders report came in at 1.3%, which was above the forecast of 1%. The data was for the July time frame, so it’s a little dated. Stocks edged higher after the report, but this particular report tends to have a muted impact on trading direction for stocks or currencies.

Earlier this morning, the weekly MBA Mortgage Applications Index climbed 7.5%, the refinance index was up 2.1% and the purchase index rose 10.5%, which hints at a modest upside pop in mortgage activity as the fixed rate dipped about 0.05% to 6.39%.

In other economic activity news, MasterCard Advisors said that shoppers reduced spending on clothes and shoes over what should have been a big back-to-school season in August, instead spending money on food and gasoline.

Ospraie Management LLC, announced plans to close its biggest hedge fund, with holdings estimated at some $2.8 billion dollars. The fund was thought to have significant exposure to equities with commodity themes and has been losing money at an alarming clip in recent months. Ospraie will still hold other hedge funds with large investments, but the fund in question has ties to Lehman Brothers Holdings Inc. (NYSE:LEH) as the investment bank has an estimated 20% stake in the fund. There are concerns that this news won’t help Lehman’s effort to raise capital or find a buyer and overshadowed news reports overseas that HSBC, another Chinese bank and several hedge funds were interested in taking a stake in the beleaguered . . .

Small-cap stocks are expected to open lower, pulled down by news of a hedge fund closure and residual selling from Tuesday’s bearish reversal. The Russell 2000 (NYSE:IWM) was down about 0.6% in overnight trading, which would suggest an opening near 734.

Hedge fund Ospraie Management LLC, announced after the close Tuesday that they would shutter operations. The fund was thought to have had some $2.8 billion under management at the beginning of August, but was leaking oil on commodity-themed equity trades. Ospraie has ties to Lehman Brothers Holdings Inc. (NYSE:LEH) as the investment bank owns some 20% of the hedge fund. There are concerns that this will only hamper LEH efforts to either raise capital or find a buyer, and the Ospraie news overshadowed a newspaper report overseas that HSBC, a Chinese bank and several other hedge funds have expressed interest in taking a stake in LEH.

It will be interesting to see if money flow once again shifts into Treasury assets. Considering the news on Ospraie, Tuesday’s big afternoon push into safe-have assets such as Treasury products makes sense. Ahead of the opening, Treasury bonds and notes were only up slightly, which means the overnight slide in equities was fueled by other concerns.

It’s worth noting that trends that used to spark buying in stocks — lower energy prices and a strong dollar — were in play again overnight, but to no avail for equities. Tuesday’s reversal off morning highs came in the face of a massive slide in crude oil prices, which raises concerns that other elements are at play in the selling. This morning, crude oil was down about $1.20 dollars a barrel toward $108.50, and the U.S. dollar was on a roll against the euro, climbing 0.6% to fresh seven-month . . .

Small-cap stocks shot higher this morning, as the bulls came charging out of the gate when crude oil prices collapsed overnight. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was up 12.03, or 1.63%, at 751.53.

Crude oil prices fell hard today as Hurricane Gustav hit landfall in Louisiana, but appeared to spare key Gulf of Mexico energy production facilities. At one point ahead of the stock market opening, crude oil prices were down some $9 dollars a barrel, tumbling below $107. If the energy market remains under pressure, then prices at the gasoline pump should fall, which would provide relief to consumers and shift money back toward other expenditures.

The ISM Manufacturing Survey came in at 49.9, which was just a tad above the forecast of 49.6. The market reaction to the data was relatively tame, with trader attention focused more on the commodity arena.

Small caps were pacing the early advance in equities this morning, just slightly outperforming the Dow and topping the S&P 500 by about 0.5%. Speaking of the S&P 500, that index product was testing important resistance along the 1,300 line, which has been a difficult hurdle to jump in recent weeks. Definitive price action above 1,300 could trigger some new money into stocks and prod short-covering from traders who have been successfully shorting rallies in stocks in recent weeks.

The U.S. dollar was in full rally mode this morning, parlaying the collapse in energy prices to higher territory. The greenback stormed to fresh move highs against the euro, climbing 0.9% to the highest point since early February. In addition, the dollar was up about 0.8% versus the yen. The combination of a soaring buck and sinking crude tugged at a host of commodity markets, with gold down 4% and cocoa . . .

Small-cap stocks are expected to jump higher on the opening, boosted by a selling rout in commodities and a surging U.S. dollar. The Russell 2000 (NYSE:IWM) was up about 1% in after-hours trading, which would suggest an open this morning near 746.50.

The big story so far today is a dramatic collapse in crude oil futures, which were down some 6%, sinking over $6.50 a barrel, below $109. Crude oil prices fell hard after it became apparent that Gustav did not appear to destroy major Gulf production sites. In conjunction with the oil move, other commodity markets were in freefall mode, with copper tumbling 2% in London, while aluminum was at a seven-month low and following a slide to five-month lows for nickel on Monday. Cocoa was down 5%, gold was off 2%, platinum down 3% and palladium down 5%.

The extreme decline in commodities was accompanied by a rally in the U.S. dollar. The greenback was up about 0.7% against the euro, making fresh highs while climbing to the highest point since early February. The dollar was also up 0.6% versus the yen.

Although oil stocks stand to weather a difficult session today, the benefit to airlines, consumer stocks and tech stocks should be more than enough to carry equities higher. UAL Corp. (Nasdaq:UAUA) jumped more than 15% in overnight trading, and small-cap airline US Airways Group Inc. (NYSE:LCC) was up some 16%.

In addition to the commodity-tied surge, financial shares appear set . . .

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 edged lower in morning trading, pulled down by a soft tone in the U.S. dollar and by renewed jitters in the financial arena following yet another bank failure over the weekend. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.03, or 1.09%, at 729.58.

The existing home sales report came in with mixed signals; the headline figure was plus 3.1%, which beat the forecast for a more tame rise of 0.9%. However, the inventory of homes was at a record high and prices are still down steeply from last year.

Regulators closed Columbian Bank and Trust Company, which marked the ninth bank failure this year as financial institutions struggle with debt write-downs and bad loans emanating from the housing meltdown.

Also on the financial front, Lehman Brothers Holdings Inc. (NYSE:LEH) was down 8.6% shortly after the opening as questions surrounding a potential purchase of the firm by the state-run Korea Development Bank have emerged. The Financial Select Sector SPDR Fund was off almost 2% in early trading.

Crude oil prices climbed back above $115 dollars a barrel overnight, but sliced away much of the overnight rise ahead of the U.S. stock market opening. After the largest one-day decline Friday in nearly four years, traders will keep a close eye on crude prices to see if they experience a snap back move higher this week. The dollar was down against the yen, but basically flat versus the euro; a stronger tone in the greenback has been an important ingredient in the recent pullback in energy and other commodity markets, allowing investors to shrug off recent awful inflation data as out of touch with the sudden summer swoon in energy markets. However, if crude starts to recover back above $120 to $125 a barrel, then it could usher in a dark cloud on the price pressure issue.

Even though crude oil prices pulled back from the overnight highs, consumer and airline stocks were still on the defensive this morning, perhaps leery that energy . . .

Small-cap stocks are expected to open slightly lower, pulled down by an overnight bounce in crude oil prices and by lingering concerns over the credit crisis. The Russell 2000 (NYSE:IWM) was down about 0.3% in after-hours trading, which would suggest a regular open near 735.40.

Many traders are looking for a choppy trading week, with heightened volatility amid lighter volume as the vacation season is still at a high level. Speaking of time away, U.K. markets were on holiday today, which could reduce morning volume in U.S. asset trading. In other action overseas, Asian markets posted solid gains, with Hong Kong up 3.5%, Japan up 1.6%, Taiwan up 1.7% and Australia up 1.6%.

The U.S. dollar was mixed overnight, up slightly against the euro, but down against the yen and continued to erode moving closer to the opening. Traders will likely keep an eye on the greenback for signals on commodities and on money flow into equities. In addition, the existing home sales report comes out at 10:00 a.m. ET and could influence morning trading direction.

Stocks to watch this morning include Wal-Mart Stores Inc. (NYSE:WMT), which was down slightly overnight in response to the bump in crude oil. Also, Lehman Brothers Holdings Inc. (NYSE:LEH) took a hit overnight as concerns were registered . . .

Small-cap stocks pushed higher Friday, ending a difficult week on an up note, as crude oil prices reversed course, a legendary investor soothed market jitters and monetary policy leaders struck a reasonably upbeat tone. In the end, the Russell 2000 (NYSE:IWM) closed up 12.36, or 1.70%, at 737.60, but still lost more than 2% for the week and small caps are still down 3.7% for the year. The Dow closed up 1.73% and is now down 12.3% for 2008; meanwhile, the S&P 500 rose 1.13% Friday and is down 11.9% for the year.

Stock market watchers got a taste this week of just how fickle and tumultuous commodity markets can be when uncertainty is in the air. With all eyes on crude oil gyrations the past few days, the market for black gold collapsed down to the $112 handle a couple days ago, then shot back up above $120 the very next day. Today, the market cooled off, with crude generating the largest one-day percentage decline in some four years, backing down to $115 as a strong dollar put the brakes on demand for commodities. Still, with geopolitical tension in the mix between Russia and the United States, and with hurricane season pulsing through the tropics, stock market traders could get seasick tethered so tightly to crude oil.

Speaking of physical markets, the Commodity Research Bureau Index of 19 various commodity markets tumbled more than 2% today, as the slide was widespread beyond just the realm of energy. A big part of the decline was tied to a sudden resurgence in the U.S. dollar, which looked awful just one day earlier. Before the market opened this morning, billionaire investor Warren Buffett said on CNBC that he was not short the dollar and that the stock market was better off today than it was a year ago, which bolstered a fragile investor psyche. On Thursday, the greenback was absolutely hammered against the yen and fell hard against the euro as well, which sparked fears of a resurgence in commodities and a flight away from U.S. assets. However, the rout on the dollar proved to be very short-lived, and the buck was back near multi-month highs against many currencies today. At this stage of the economic . . .

After opening higher on the session, small caps accelerated into the green as Federal Reserve Chairman Ben Bernanke eased inflation concerns and oil deflated.

At 12:00 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.44, or 0.89%, at 731.69, while the Dow gained 156.82, or 1.37, to 11587.03.

Bernanke, speaking at a conference for central bankers in Jackson Hole, Wyoming on financial stability, said that recent declines in commodity prices and stabilization of the dollar were “encouraging,” and that although the inflation outlook is uncertain, the Federal Reserve will act as needed to maintain price stability. As Bernanke spoke the gains accelerated in the market.

Adding to the glee, oil has sold off $3.42 a barrel to roughly $117.76 midday, as OPEC announced that it would increase output though anxiety surrounding tensions between United States and Russia remain on the radar.

As oil has deflated, the greenback rallied against the euro and the yen after a sharp dip on Thursday.

In other positive trading catalysts, “The Oracle of Omaha,” Waren Buffett, said on CNBC that stocks are “more attractive” today than they were a year ago and that he currently does not have any bearish bets against the dollar. He also said that he has increased a stake in one of his financial firm investments

Small-cap stocks pushed higher on the open, buoyed by a slide in crude oil prices, a bounce in the U.S. dollar, and soothing comments from billionaire investor Warren Buffett. At 10:04 a.m. ET, the Russell 2000 (NYSE:IWM) was up 8.35, or 1.15%, at 733.60, holding on to gains after the first flash of headlines from Federal Reserve Chairman Ben Bernanke.

Bernanke, speaking on financial stability, said that recent declines in commodity prices and the stability of the dollar were encouraging, and that although the inflation outlook is uncertain, that the Federal Reserve will act as needed to maintain price stability.

Buffett, nicknamed “The Oracle of Omaha” said on CNBC ahead of the opening this morning that stocks were “more attractive” today than they were a year ago and that he does not have any current bearish dollar investments. Buffett’s comments provided a lift to stock index futures and to the dollar ahead of the regular market opening.

Crude oil prices were in retreat mode this morning, unable to extend the dramatic rally from Thursday’s action. Crude oil prices were down nearly $2 dollars a barrel, hovering just below $119, weighed down by OPEC output increases. However, the market is still cautious about tensions between the United States and Russia and closely watching storm patterns trekking through the Gulf of Mexico.

The U.S. dollar was righting the ship today after a sudden freefall Thursday, which also pressured crude oil prices and a host of other commodity markets. The greenback was up some 1.2% against the yen and the pound sterling, and was up about 0.6% versus the euro. At this stage of the economic cycle a firm dollar is seen as a sign of optimism about the U.S. economy relative to other world economies, and . . .

A spike in crude combined with a depreciating dollar, financial sector woes and disconcerting economic data sunk small caps lower on the session midday.

At 12:12 p.m. ET, the Russell 2000 (NYSE:IWM) was down 5.98, or 0.82%, to 725.62, while the Dow had sold off 35.83, or 0.31%, to 11,381.60.

After stabilization within the $115 range, oil has broken out in a volatile spike, climbing almost $6 a barrel, as a weaker dollar and jitters that bubbling contention with Russia over its penetration of Georgia could disrupt oil deliveries. With oil's spike the market sold off further, as a rise in the commodity means greater inflation, crippled profits for businesses and usurped consumer spending power.

While oil climbed the greenback sold off against both the euro and the yen. “The U.S. dollar [has] tank[ed] on the soft data along with the rise in oil,” Andy Busch, foreign exchange strategist for BMO Capital Markets said in an email. “With a firm bottom in oil at $112 and continued focus on GSEs, the dollar has peaked.”

The financial sector has yet again brought the broader market down, as Citigroup slashed its earnings outlook for Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Lehman Brothers (NYSE:LEH). Fear of a collapse in government-sponsored enterprises Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) continue to enrapture equities, as the market speculates the government is near to bailing them out.

Lehman Brothers has sold off on reports from the Financial Times that Korean and Chinese investment groups have backed away from taking a stake in the embattled Wall Street brokerage/banking firm. Additionally, the Wall Street Journal is reporting today that the Federal Reserve is said to have called Credit Suisse in July to ascertain if it had indeed yanked a line of credit from Lehman Brothers in response to a rumor. If indeed the Fed did do this, its actions only serve to confirm the rampant fears in the market.

Small-cap stocks opened lower, pressured by slumping financial shares, a dramatic surge in crude oil prices and a slide in the U.S. dollar. At 10:06 a.m. ET, the Russell 2000 (NYSE:IWM) was down 3.03, or 0.41%, at 728.56.

A fresh batch of economic data this morning offered a mixed bag for investors and market analysts, with weekly claims a tad better than feared, while leading indicators were worse than forecast and the Philadelphia Fed Survey came in soft, but better than expected. The leading indicators report came in at minus 0.7%, which was quite a bit worse than the forecast for a slide of 0.2%, and the indicators index fell to 101.2, the lowest reading since October 2004.

Earlier today ahead of the opening, the weekly claims report came in a little better than expected, but failed to stir much more than a brief mild bounce off overnight lows in stock index futures. The headline figure on unemployment claims was at 432,000, which was below the forecast of 440,000 and a decline from last week’s 445,000 number. The four-week moving average on claims rose to 445,750 while continuing claims dipped to 3.362 million. Even though the headline figure on weekly was a better number than feared, it should be noted that the four-week moving average was the highest since December 2001.

The early mood today has been darkened by fresh analyst downgrades within key large-cap financial stocks, as the big Street analysts take turns lowering the outlook on their competitors. This time around, Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) were the targets, and their stock slipped 1.5% and 2%, respectively, shortly after the open.

In addition, Lehman Brothers Holdings Inc. (NYSE:LEH) was down 6.3% on reports from the Financial Times that Korean and Chinese investment groups have . . .

Small-cap stocks are expected to open lower, pulled down by worries about financial stocks, a jump in crude oil prices and a sharp downward thrust in the U.S. dollar. The Russell 2000 (NYSE:IWM) was down about 0.6% in after-hours trading, which would suggest a regular open near 727.20.

This morning’s weekly claims report finally wasn’t a big bearish surprise for the market, with the headline figure coming out at 432,000, below the forecast for 440,000. The immediate reaction in stock index futures was a two-handle bounce in S&P 500 futures, but the market was still in negative territory in the first few minutes after the report came out.

The credit crisis has re-emerged as a trouble spot for the U.S. economy and for the financial sector in general this week. In Wednesday’s trading, government-sponsored enterprises (GSEs) were hammered, and both Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) were lower again overnight.

The fresh news on the financial front this morning were a batch of analyst downgrades for several large financial stocks, including Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS), both of which were lower overnight. Also, the Financial Times said that Lehman Brothers Holdings Inc. (NYSE:LEH) would . . .

Small-cap stocks finished out an up and down session Wednesday with a mild profit after spending much of the day getting bounced around by turbulent price action in crude oil futures. The Russell 2000 (NYSE:IWM) eventually closed up 1.54, or 0.21%, at 731.60 and is now down 4.49% for the year. The Dow closed up 0.61%, while the S&P 500 was up 0.62%. The Dow is off 13.9% for the year, while the S&P 500 is down 13.2%.

The frenetic action in crude oil overshadowed a positive story in the tech arena following upbeat results by the world’s largest computer maker and shuffled big overnight gains in Asian stocks into the backdrop as well.

Crude oil prices plunged to a morning low at $112.61, as the weekly inventory report showed a surprising increase in stockpiles, but then the market reversed course as the energy traders were uneasy with Russia’s response to a missile deal between the United States and Poland, especially with tensions rising between the U.S. and Russia over the Georgian conflict. For the day, crude oil traded in a wildly wide range between $112.61 and $117.03 and closed up $0.45 at $114.98. Goldman Sachs analysts also reiterated their call for $149 crude oil prices by the end of the year, which probably won’t sit well with long-term equity market bulls if it pans out.

The U.S. dollar remained firm against the euro despite the afternoon surge in crude oil, and a strong tone in the greenback remains a potential positive for equities — reflecting global confidence in U.S. assets, even if some of that confidence is really more a lack of faith in other economies around the world. Elsewhere on the commodity inflation front, corn, soybeans and wheat shot higher and the Commodity Research Bureau Index of 19 key physical markets rose about 0.7%.

Although financial shares performed much better today than they fared Monday and Tuesday, it was hard to look past the dramatic free fall in government-sponsored enterprises (GSE), with Fannie Mae (NYSE:FNM) collapsing 25% and Freddie Mac (NYSE:FRE) tumbling 21% as investors decided that a government bailout of the 1mortgage financing giants could crush current shareholder value. Both stocks were at their lowest levels in nearly two decades as everyone scrambled for the exit door at the same time. Despite the wipeout in GSEs, major bank stocks and many . . .

After dipping into the red briefly this morning, small caps swung into the green, but remain almost flat midday, as earnings from tech heavy weight Hewlett-Packard, gains in the dollar, and a decline in crude overshadowed concerns surrounding the financial sector, notably Freddie and Fannie’s viability.

At 12:15 p.m. ET, the Russell 2000 (NYSE:IWM) was up 0.50, or 0.07%, at 730.53, while the Dow was up 0.08% and the tech-laden Nasdaq had slipped 0.04%.

The market focused on the positive in the negative news abyss. Hewlett-Packard Co. (NYSE:HPQ), the world’s largest computer maker, posted robust quarterly results that bested the consensus on Wall Street and fueled a surge in the tech-heavy Nasdaq for a good portion of the morning. 

In other positive news, the greenback is gaining against the euro and the yen midday after having trimmed gains earlier in the session. The price moves reflect confidence from overseas investors on the U.S. economy and U.S.-tied assets — including stocks.

As the dollar has rallied, crude oil has turned lower, slipping $1.58 to $112 and change a barrel midday following a report from the Energy Information Administration that oil inventories increased more than forecasted from last week. The commodity has sold off from a surge above $116 a barrel earlier this morning.

Small-cap stocks opened higher, but quickly slipped into negative territory, pulled down by a rally in crude oil prices, which raised a caution flag about consumer spending and inflation trends. An opening burst tied to overseas stock market gains, a firm dollar and strong tech earnings failed to gain traction, but remains a positive element in play looking forward today. At 9:57 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.28, or 0.17%, at 728.80, while the Dow was off 0.34% and the tech-laden Nasdaq 100 up 0.13%.

Tech stocks were lifted by solid quarterly results from Hewlett-Packard Co. (NYSE:HPQ) as the world’s largest computer maker topped the earnings forecast. HPQ shares were up 4.3% shortly after the open.

Crude oil prices were on the rise this morning, climbing more than $1.50 a barrel back north of $116, bolstered by Goldman Sachs analysts reiterating their forecast for $149 crude oil by the end of the year. In addition, energy prices were supported by short-covering in front of today’s weekly inventory report, which is expected to show a drawdown in crude stocks of some three million barrels. The bounce in crude oil prices was taking an early toll on airline stocks, with the AMEX Airline Index tumbling 7%, with small-cap carrier US Airways Group Inc. (NYSE:LCC) off 8%. In addition to the advance in crude oil, grains prices were called solidly higher today, despite a firm tone in the U.S. dollar.

The greenback was in rally mode overnight, rising about 0.3% against both the euro and yen, which suggests some confidence from overseas investors about the U.S. economy and U.S.-tied assets — including stocks. However, those overnight gains in the buck were trimmed after stocks turned lower.

Some confidence in equities heading into the opening was linked to a big rally overnight in the Chinese stock market, which soared 7% on talk that a government stimulus plan was in the works to bolster equities and spark a slowing economy. In addition to China, stocks in Hong Kong were up 2.1%, Taiwan up 0.9%, . . .

Small-cap stocks fell hard Tuesday, as the combination of credit worries, high inflation and a slumping housing market whipped up the perfect bearish storm. The Russell 2000 (NYSE:IWM) closed down 11.94, or 1.61%, at 730.03, while the Dow was off 1.14% and the S&P 500 was down 0.93%. For the year, the Russell is now down 4.69%, backing off quickly after flirting with a test of positive yearly territory late last week. The Dow is down 14.4% for 2008 and the S&P 500 is off 13.7%.

Financial shares remained at the center of the seller hurricane, extending the rout that started Monday as talk of more debt write-downs started making the rounds. The fresh target today was Lehman Brothers Holdings Inc. (NYSE:LEH), which crashed 13% after analysts predicted $4 billion more in bad mortgage debt was ready to rolled off the books this quarter. The shudder of renewed bad debt fear swept through financial stocks, with the Financial Select Sector SPDR Fund tumbling 2.9% and the PHLX KBW Banking Index sinking 3.4% Major U.S. banks like Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC) were hit by the concerns, slipping 2.5% and 4.1%, respectively.

And while the credit crisis was back in play again today, the market also had to come to grips with yet another bad inflation economic report. Last week saw investors essentially shrug off scary inflation numbers on the Consumer Price Index release, dismissing the data as less disturbing because it didn’t reflect the recent collapse in crude oil prices. Then today’s Producer Price Index (PPI) report not only showed headline inflation at 27 year highs, but also reflected “core” inflation, which excludes food and energy prices, at 17-year highs. The realization that the inflation story isn’t just about $4-a-gallon gasoline pump prices and higher grocery bills is a sobering thought for the market.

Just to finish off the bearish news, July housing starts came in below the forecast, with the unit rate at the lowest point since 1991. So, PPI is at 27-year highs, core inflation is at 17-year highs and housing starts are at 17-year lows. Combined, it’s not a pretty picture, and it also handcuffs monetary policy makers who have to walk a tightrope between battling inflation versus coddling economic health.

Broad market sectors on the decline Tuesday included motorcycle manufacturers, real estate management firms, department stores, consumer finance, casinos, . . .

Small-cap stocks remained under pressure into mid-session, anchored down by renewed concerns about the economic picture and by ongoing jitters over the credit crisis. The Russell 2000 (NYSE:IWM) tumbled to session lows, snapping chart support at 734 while moving within striking distance of key support at 726. At 12:35 a.m. ET, the Russell was down 11.71, or 1.58%, at 730.26.

Small caps were noticeably weaker than large-cap index products, with the Dow off about 1.11% and the S&P 500 down 0.92%. Small caps have outperformed all year long and were overbought on momentum readings coming into this week’s action. Looking at dozens of individual small-cap stocks, one theme keeps repeating: stocks that were making new move highs just last week are getting pounded as investors scramble to book profits.

That desire to step aside on equities was ignited Monday when financial shares came under renewed fire from worries about the credit crunch amid reports that several large players still are facing massive debt write-downs. On that same theme today, analysts cautioned that Lehman Brothers Holdings Inc. (NYSE:LEH) could take another $4 billion in mortgage-tied losses this quarter, and LEH stock took a dive approaching 9%.

Fresh economic data on inflation and housing failed to offer any immediate good news to counter the dour investor mood, as the Producer Price Index (PPI) climbed to 27-year highs on a yearly basis. What’s more, the PPI also showed that inflation was creeping into other areas besides gas and food, which makes it harder to discount the data by pointing at recent declines in energy prices.

On the energy front today, crude oil prices were actually sinking, moving back toward $112 a barrel, as energy traders fret about soft demand from slumping economic conditions around the world. In addition, the latest tropical storm to slam through the Gulf of Mexico region veered away from key production areas, which negated the need to build a storm premium into the market. The U.S. dollar softened as the stock market ebbed, with the greenback tumbling 0.6% against the euro and slipping about 0.3% against the yen. Elsewhere on the commodities front, grains prices were . . .

Small-cap stocks took a hard turn south Monday as a revival of credit crunch fears turned a sleepy morning opening into an aggressive afternoon slide. The Russell 2000 (NYSE:IWM) shed 11.40, or 1.51%, to 741.97, while the Dow lost 180.51, or 1.55%, to 11479.38 and the S&P 500 was down 19.60, or 1.51% to 1278.60. For the year, the Russell is off 3.1%, the Dow down 13.4% and the S&P 500 down 12.9%.

The charts provided a caution sign Friday that the bull run might be on fumes when the Russell made new move — and yearly — highs but closed in negative territory. With the short-term bulls content to take profits amid overbought momentum readings, it left the market vulnerable to any bad news, and today’s credit fears filled that void with a vengeance.

For the better part of a year now, the credit crisis has never really gone away, but remained simmering in the background until another flare-up would bring those fears to the forefront. Today’s flare-up was tied to concerns that Treasury funding and recapitalization of government-sponsored enterprises (GSEs) would work to the detriment of current stockholders in mortgage lending giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). It wasn’t the kind of news that investors in those firms wanted to hear, and FNM shares tumbled 21%, while FRE was down 24%. Those fires were then fanned by talk that Lehman Brothers Holdings Inc. (NYSE:LEH) could be facing massive losses in the next earnings release and that the firm might pre-release earnings. LEH shares slipped 5%.

The investor psyche surrounding financial shares is quite fragile, and the GSE/LEH woes spread like wildfire through the entire sector. The Financial Select Sector SPDR Fund was down 3.6%, while the PHLX KBW Banking Index was down 3.6%. Top U.S. banks such as Citigroup Inc. (NYSE:C) and Bank of America Corp. . . .

Small-cap stocks remained lower into midday trading, pulled down by renewed jitters over the credit crunch, which weighed on the financial arena and siphoned some money away into safe-haven Treasury instruments. At 12:35 a.m. ET, the Russell 2000 (NYSE:IWM) was down 3.98, or 0.53% at 749.39. Large-cap index products were attracting more aggressive selling, with the Dow off 0.98% and the S&P 500 down 0.85%.

A weekend story in Barron’s intimating that the Treasury Department would have to recapitalize government-sponsored mortgage lending giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) at the detriment to current shareholders sparked a rout in mortgage financing stocks, with FNM tumbling 13% and FRE also down 13%. Credit default swaps on GSE, or government-sponsored enterprises, debt widened to record highs, which reflects unease with assuming paper on the firms.

The concerns about GSEs cascaded into the entire financial arena, with the Financial Select Sector SPDR Fund down 2.7% and the PHLX KBW Banking Index down almost 3%. Lehman Brothers Holdings Inc. (NYSE:LEH) tumbled nearly 4% following a report in The Wall Street Journal that the brokerage firm could post $1.8 billion losses and may pre-announce its earnings...

After spiking into the green out of the gate, small caps have since plunged and are flickering in and out of the green and red midday after waning global economic growth weighed on oil, pushing the dollar and larger-cap equities higher.

At 12:30 p.m. ET, the Russell 2000 (NYSE:IWM) slipped 3.46, or 0.46%, to 750.91, while the Dow had gained 18.73, or 0.16, to 11634.66.

Crude has touched a low on today’s session, selling off $3 a barrel to roughly $111 midday and posting a three month low, after OPEC forecasted that global demand for energy continue to falter.

Higher oil prices have pushed input costs for all companies higher and have weighed on operations. A decline in global growth would mean a reduced thirst for oil, which would push down the escalating raw material costs for most firms. However, that slower growth means less demand for final products. So it’s a double edged sword keeping equities in check.

“The global economic race to the bottom appears to be over as the U.S. has hit bottom and the rest of the world is still falling,” Andy Busch wrote in an email today.

The potential slowing global growth’s effect on oil sent the dollar surging to $1.4686 against the euro and 110.47 against the yen midday. The surge in the dollar as of late all started with the European Central Bank’s dovish comments last Thursday followed by reported negative GDP growth in the euro zone.

Small-cap stocks pushed higher in morning trade, carried on the wings of a renewed rally in the U.S. dollar and a slide in global commodities — particularly crude oil. At 9:59 a.m. ET, the Russell 2000 (NYSE:IWM) was up 5.24, or 0.69%, at 759.62; the morning peak in the Russell marked the highest intraday price since Jan. 2.

Small-cap stocks are on the verge of posting the highest weekly close of 2008, a remarkable achievement considering the Dow and S&P 500 are still suffering losses in the 11% range so far this year. Any close today above 747.38 would do the trick. If the Russell were to really catch fire today and push above 766.03, then small caps would actually be in positive territory for the year. The reason it takes a big leap from current yearly high weekly closing levels to positive territory is because the market got hammered the very first trading day of the year and also fell hard when staking the June peak.

Back to the big news today — the U.S. dollar stormed to fresh move highs overnight against both the euro and the Japanese yen, climbing about 0.6% versus both currency markets. The strong upside push in the greenback clearly had a bearish impact on commodities, most notably the crude oil market. Crude oil tumbled some $2 dollars a barrel back below $113 and was hovering just above three-month lows early this morning. The story in commodities wasn’t just an energy tale, however; palladium was down 5% this morning, cocoa was off 2.5%, sugar was down 2.2%, copper tumbled 2.7% in London trading and aluminum prices hit a six-month low. The recent collapse in commodities markets (the Commodity Research Bureau Index has tumbled 17% from the July high) has provided some relief on the inflation front and bolstered investor psychology that consumer spending won’t be crushed by higher gasoline and food prices.

In addition to the dollar/commodities theme, the market also got some bright news this morning on the manufacturing front. The NY Manufacturing Survey came out at plus 2.77, which was much stronger than the forecast for minus 4.4, and marked the first positive reading since April. This survey is for August and marks one of the earliest manufacturing reports of the month, setting a positive tone going forward. When the NY report came out ahead of the opening, stock index futures and the . . .

Small-cap stocks are expected to open higher, bolstered by a rally in the U.S. dollar and a slide in crude oil prices in after-hours trading. The Russell 2000 (NYSE:IWM) was expected to open 0.3% higher, which would translate to an open near 756.60.

Once again, the big story overnight was a surge in the U.S. dollar, which climbed to fresh move highs against both the euro and the yen, rising some 0.6% against both currency markets. The rally in the greenback clearly pulled down commodity markets overseas, with crude oil slipping more than $2 dollars a barrel back below $113, near three-month lows.

The NY Manufacturing Survey came in at 2.77, which was well above the forecast for a slide of 4.4. This marked the first positive reading for the report since April and is a nice upside surprise for the manufacturing sector ahead of several more data releases coming up over the next few weeks. Stocks extended overnight gains as did the dollar on the news.

Still ahead this morning is the industrial production report at 9:15 a.m. ET and the Michigan sentiment survey at 10:00 a.m. ET. Also, Chicago Federal Reserve President Charles Evans will talk about the economic outlook at 1:30 p.m. ET.

Stocks in the news overnight included Lehman Brothers Holdings Inc. (NYSE:LEH), which rallied about 3% on news that billionaire investor George Soros increased his stake in the beleaguered brokerage firm to some 9.5 million shares. NRG Energy Inc. (NYSE:NRG) also attracted a famous investor, with Warren Buffett adding . . .

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...

Small-cap stocks are expected to open higher, boosted by mild overnight gains tied to ideas Thursday’s slide was overdone. The overnight support gained momentum after a strong durable goods release this morning. The Russell 2000 (NYSE:IWM) was up about 0.5% in after-hours action, which suggests an open near 705.50.

The durable goods report came in much stronger than forecast, with the headline figure at 0.8%, compared with the median projection for a slide of 0.3%. The immediate response in S&P 500 futures was about a four-handle bump on the report. It should be noted that durable goods is a June figure and seldom has a long trading shelf life, but the figure was a bullish surprise and could help stem some of the gloom from Thursday’s steep decline.

Later this morning, the market will get a chance to respond to consumer sentiment data from the University of Michigan survey, which comes out a little before 10:00 a.m. ET. Just slightly after Michigan, new home sales will complete a tame slate of data this week. Considering the market tanked after existing home sales Thursday, perhaps the new home sales figures will garner more attention.

Crude oil futures were up overnight heading toward the stock market open, with crude oil climbing back above $126 dollars a barrel. Even after the strong durables report, the U.S. dollar was still down against the euro, which was a supportive element for crude oil and gold. Given a sharp recent slide in crude oil, there may be some reluctance to press the market on black gold ahead of the weekend.

Looking at the chart picture, Thursday’s decline finished off a nice little evening star top on daily candlestick charts. Short-term momentum readings are no . . .

Small-cap stocks plunged shortly after Friday’s opening, showed resilience during the first hour of trading but have exhibited a downward trend in afternoon trading. The uncertainty surrounding Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) combined with record-high crude oil prices have spurred a sell-off today. At 2:17 p.m. ET, the Russell 2000 (NYSE:IWM) was down 2.07, or 0.31%, at 668.37.

Investors responded tepidly to Treasury Secretary Henry Paulson’s short statement that the U.S. government is committed to “supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission.”

Fannie Mae has fallen some 24% this afternoon, and similar losses were pinned on Freddie Mac on high volume. Selling fury was fueled overnight by an article in the New York Times suggesting the government was considering a takeover of the embattled mortgage lending giants as the housing slump and credit crisis wallop the firms.

The freefall in federally chartered corporations, or GSEs, spilled over to the rest of the financial sector, with large caps such as Wachovia Corp. (NYSE:WB) down 9%, Merrill Lynch down 5% and Lehman Bros. (NYSE:LEH) off 15% in afternoon trading.

“Retail and credit issues sparked selling Thursday and remain a concern today. Volatility is high right now,” Nick Kalivas, vice president of financial research with MF Global, told SmallCapInvestor.com in an email interview. “I think FNM and FRE are vulnerable to further losses, but the market is thinking that the government will aid the GSEs in some way and keep the financial system whole.”

Small caps were able to outperform large caps during Thursday’s bounce, but Kalivas said the move was powered more by a recovery in oil and natural gas that sparked money pouring back into small-cap energy firms. “I think it is more a beta trade or a sector trade than a sign of the market’s overall health. I’m not reading . . .

Small-cap stocks plunged early Friday as a downward spiral developed among government-sponsored mortgage firms and record high crude oil prices sent equity bears on a stampede. At 10:00 a.m. ET, the Russell 2000 (NYSE:IWM) was down 3.09, or 0.46%, at 667.35, an ugly start to the day, but well off the initial morning lows.

The Michigan sentiment survey came in better-than-expected, with the headline figure at 56.6, compared with the median forecast of 55.5. The stock market appeared to bounce mildly off the lows in conjunction with the Michigan figures, but the market was already trying to mount a recovery move even before the data came out.

Fannie Mae (NYSE:FNM) collapsed some 40% shortly after the open, and similar losses were pinned on Freddie Mac (NYSE:FRE) on huge trading volume. Selling fury was fueled overnight by an article in the New York Times suggesting the government was considering a takeover of the embattled mortgage lending giants as the housing slump and credit crisis wallop the firms.

The freefall in GSEs spilled over to the rest of the financial sector, with large caps such as Wachovia Corp. (NYSE:WB) down 9%, Merrill Lynch down 6% and Lehman Bros. (NYSE:LEH) off 17%. Small-cap index products are peppered with regional and small banks, and they often have even more trouble gaining access to credit than the bigger banks, so heightened fears on the credit crunch could slice into the outperformance seen in the Russell 2000 versus large-cap index products (although in early trade, losses in the Russell 2000 were on a slower pace than its big-cap brethren).

“Retail and credit issues sparked selling yesterday and remain a concern today. Volatility is high right now. I think FNM and FRE are vulnerable to further losses, but the market is thinking that the government will aid the GSEs in some way and keep the financial system whole,” Nick Kalivas, vice president of financial research with MF Global, told SmallCapInvestor.com in an email interview.

“I think earnings news should be the main focus and Thursday’s DOW/ROH deal was bullish, but the credit environment is so uncertain and the market does not see the financing available for a host of deals. The market is cheap based on the M&A, but there may not be the liquidity or money to actually push it higher. That . . .