Tag - Bk

Small-cap stocks are expected to open sharply higher again this morning, bolstered by news that the U.S. government will spend some $250 billion buying equity in various major banks. The Russell 2000 (NYSE:IWM) was up nearly 3% in after-hours trading, which would translate to an open near 587.

Stock markets around the world remained in rally mode overnight, with Japan generating a massive 14% surge. European shares were up some 5%, while Hong Kong was up 3.1%, Taiwan up 5.4%, Australia up 3.7%, Singapore up 2.5%, South Korea up 6.1% and India up 1.5%. China shares were actually down 2.5%.

Banks will be in the spotlight early today. In after-hours action, Bank of America Corp. (NYSE:BAC) was up nearly 8%; Wells Fargo & Company (NYSE:WFC) up 5%; JP Morgan Chase & Co. (NYSE:JPM); Bank of New York Mellon Corporation (NYSE:BK) up 7% and Goldman Sachs Group Inc. (NYSE:GS) up 9%, just to name a few of the big banks that should stand to benefit from this latest government freebie.

In addition, in an address on the financial crisis this morning, President Bush said the government will also guarantee “most” new loans for a short period of time, another measure aimed at thawing the distrust level among banks lending to each . . .

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 . . .