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Small-cap stocks extended the morning decline into midday trading, with retailer stocks leading the way down. Additional pressure came from sinking energy stocks, a weak tone in some commodity names, tumbling automakers and modest declines in financial shares as well. At 12:31 p.m. ET, the Russell 2000 (NYSE:IWM) was down 15.82, or 3.25%, at 470.44.

Last weekend was supposed to serve up one final heroic shopping push into the Christmas holiday, but awful weather in several key markets around the country didn’t exactly help save the day. Analysts at DA Davidson today said that this shopping season could be the poorest in some 25 years, since the recession back in the early 1980s. The S&P Retail Index was off some 4% at mid-session.

Crude oil prices resumed the downward path after showing some upside potential earlier this morning. Crude oil was off more than 3%, slipping back below $41 a barrel as Chinese imports tumbled to the lowest level of the year in November. Energy stocks were off about 2.5%.

Automakers were finding out that the glow from Friday’s $13.4 billion dollar White House bailout had a short shelf-life among investors. General Motors Corp. (NYSE:GM) was down 16% at midday, while Ford Motor Co. (NYSE:F) was off 11%. Credit Suisse analysts lowered its rating on GM to “underperform” and cut their price target to $1, saying that GM’s credit could be entirely wiped out if it complies with restructuring mandates in the bailout fine print.

Restaurants were a hot item on Friday, but were a little cool this morning, perhaps tied to profit-taking and also from the ongoing worries about the economy. Among small-cap movers, eatery chain Lubys Inc. (NYSE:LUB) was down 17%. Other small caps on the decline included Jones Apparel Group Inc. (NYSE:JNY) off 15% and Browne & Co. Inc. (NYSE:BNE), down 15% as the marketing communications firm gave back a huge chunk of Friday’s rally. Oxford Industries Inc. (NYSE:OXM) was down 14% as the apparel maker turned south along with other apparel and retail names after a strong performance last week. On the upside, MAP Pharmaceuticals Inc. (Nadsaq:MAPP) remains a popular small-cap share on the rise after . . .

Small-cap stocks went back into full-fledged collapse mode Wednesday as recession fears were stoked by dreadful retail sales, a cautious tone from Federal Reserve Chairman Ben Bernanke and the “beige book” report on the economy that showed activity weakening across the U.S. The Russell 2000 (NYSE:IWM) closed down 52.54, or 9.47%, at 502.11, the second-lowest close in more than five years. The Russell 2000 is now down 34% for the year, while the Dow is off 35% and the S&P 500 is down 38%. Today’s freefall represented the largest one-day decline of the year, just two days after the market put together the biggest one-day advance of 2008.

The market was already in a defensive posture ahead of this morning’s opening, but if the bulls were hoping for some kind of friendly surprise out of the latest batch of economic data, it just didn’t happen, which opened the floodgates of selling pressure. Then, as the morning progressed, the awful retail sales number was followed up by a speech from Bernanke that worried investors, then the afternoon ushered in the beige book report that underscored a fragile economic position right now.

When it was all said and done, the biggest headline today was likely the retail sales report, which not only slumped to the worst percentage decline in more than three years, but which was also woefully short of the forecast. For the record, September retail sales were down 1.2%, compared with the projection for a slide of 0.6%. In addition, this marked the third consecutive negative reading for retail sales — something that has not happened in some 17 years. With the U.S. economy largely driven by consumer spending, a pullback in retail sales heading toward rising unemployment was not the kind of news needed to extend the recent recovery bounce in stocks.

Fears of a global slowdown punctuated by a deep recession in the U.S. permeated all investment classes. Crude oil prices slumped to fresh 13-month lows, sinking some 5% to close at $74.54 a barrel, and the recent collapse in energy prices has been a bearish element in play for energy stocks. But the slide in commodities was more than just an energy story. Copper prices shed some 8% today and Chile’s Codelco, which operates the largest copper mines in the world, acknowledged that the 2009 outlook likely included lower prices. The Commodity Research Bureau Index of 19 . . .

Small caps have plunged over 6% this afternoon, as recession fears have gripped stocks. Already concerned about still frozen credit piping, a slew of lackluster economic data and a sobering speech by Fed Chairman Ben Bernanki only served to push the market lower. Small-cap gainers today include Trina Solar (NYSE:TSL), BankAtlantic (NYSE:BBX) and China Mass Media (NYSE:CMM). Other Market Watch highlights today included:

• Looking at the chart picture for small caps, the market appears to be consolidating after a breathtaking bounce off the lows.
• Sectors bucking the decline were few and far between, but soft drink makers, airlines and biotechs attracted some buyers.
• Other sectors on the decline included construction and farm machinery and consumer finance.
• Commodity themes slid early today, with metal and mining stocks, coal, oil and gas drillers, steel, oil exploration and aluminum all taking a hit.
• The NY Manufacturing Survey is down 24.6% to the lowest reading in some seven years, adding to the bleak tone from the retail sales figure. 

Small Cap Gainers:

• Trina Solar (NYSE:TSL) jumps 16% after raising third-quarter revenue guidance and reaffirmed full year guidance.
• BankAtlantic Bancorp, Inc. (NYSE:BBX) up 8.53% as regional banks are seeing a boost today.
• China Mass Media Intl Adv Corp. (NYSE:CMM) up nearly 7.25% on light volume.

Small Cap Losers:

• iStar Financial's (NYSE:SFI) shares tumble 30%. Last week Fitch gave a negative outlook on the small cap.
• Callaway Golf (Nasdaq:CDNS) slips 16% after Stephens Inc. analyst cut earnings estimates for companies in the sports and leisure sector.
• Jones Apparel (NYSE:JNY) shares tumble 25% to lowest level since 1995, after the retailer cut its forecast on soft consumer spending.

Small caps have plunged this afternoon, as recession fears have gripped stocks. Already concerned about still frozen credit piping, a slew of lackluster economic data and a sobering speech by Fed Chairman Ben Bernanki only served to push the market lower. At 2:36 p.m. ET, the Russell 2000 (NYSE:IWM) was down 34.81, or 6.28%, to 519.99.

A ghastly retail sales report, hit equity markets hard this morning, causing traders to keep their fingers on the sell button. September retail sales plunged 1.2%, which was nearly double the forecast for a slide of 0.6%. This marked the largest one-month decline since August 2005. Even worse, this was the third consecutive month retail sales have fallen, which hasn’t happened in more than 17 years. With two-thirds of the U.S. economy driven by consumer spending, the plunge in retail sales signals to the reality of a consumer led recession.

Adding to the grim economic picture, factory activity in New York slumped in October, with the NY Manufacturing Survey down 24.6% to the lowest reading in some seven years.

Also, on the economic docket today, the producer price index, a measure of wholesale inflation, wasn’t nearly as dismal. The headline figure for PPI met the forecast at minus 0.4%. “Although the core component is a little worrisome, lower commodity prices and the firmer tone the USD is taking should restrain costs in the year ahead,” BMO Capital Markets economist, Jennifer Lee wrote today.

Ahead of the opening this morning, the MBA Mortgage Application Survey rose 5.1% as mortgage rates slipped; however, purchase activity remained near seven-year lows. ...