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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. . . .

PMFG Inc. (Nasdaq:PMFG), North American Galvanizing & Coatings Inc. (Nasdaq:NGA) and Yucheng Technologies Ltd. (Nasdaq:YTEC) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $1 billion.      

Also included among the results: Alto Palermo (Nasdaq:APSA), LECG Corp.(Nasdaq:XPRT), Salix Pharm (Nasdaq:SLXP), Encore Bancshares Inc (Nasdaq:EBTX), Berkshire Bancorp Inc. (Nasdaq:BERK) and TeleCommunication Systems Inc. (Nasdaq:TSYS).         

Here are the biggest percentage losers among small caps:    

Staar Surgical Co. (Nasdaq:STAA), Micromet Inc. (Nasdaq:MITI) and NCI Inc. (Nasdaq:NCIT) are among the new 52-week highs in Friday's trading among companies with market capitalizations under $1 billion.       

Also included among the results: Wilshire Bancorp Inc. (Nasdaq:WIBC), Hanger Orthopedic Group Inc. (Nasdaq:HGR), Industrial Services of America Inc. (Nasdaq:IDSA), Hawk Corp. (Nasdaq:HWK), North American Galvanizing & Coatings Inc. (Nasdaq:NGA) and Parlux Fragrances Inc. (Nasdaq:PARL).  

Here are the new 52-week highs among small caps:   

The Russell 2000 (NYSE:IWM) edged lower Monday, slipping 3.06, or 0.42%, to 718.00. Despite the dip, the market was still sitting on the second highest daily close since mid-February, and the rather tame pullback was no surprise given overbought momentum readings on daily studies after last week’s big surge.

In addition to profit-taking from short-term traders who caught the rally last week, the psychology behind today’s decline was fueled by soft earnings from the nation’s second largest bank, Bank of America (NYSE:BAC), which fell about 2.5% and was one of the biggest losers in the major broad indices. In addition, National City Corp. (NYSE:NCC), was down 27% after poor quarterly results and the general malaise in the financial sector kept ongoing frets over the credit crunch in play.

“The Fed has eased monetary policy 300 bps in a short span of time and implemented three new programs to reduce stress in the financial markets. However, market stress remains persistent,” Asha Bangalore, an economist with Northern Trust, said in an email. Bangalore noted that, “At the long and risky end, the spread between junk bonds and the yield on the 10-year U.S. Treasury note has improved” but remains elevated and a far cry from the spread levels prior to August 2007. “These indicators of market stress would have to show a significant improvement before it can be declared that the coast is clear,” she said.

In addition to credit market jitters, the market will likely continue to focus on various key headline earnings results the next couple of days, as the economic calendar is tame this week. In fact, there are no economic reports on tap until Wednesday’s existing home sales release, and although the housing market is in . . .

Small caps are continuing to bleed red in Monday’s trading. At 1:46 p.m., the Russell 2000 (NYSE:IWM) is down 0.82%, or 5.9, at 715.17. After Friday’s big rally, the index slipped in early trading today, broached the 718 mark briefly, and then continued to slide.

The market is digesting results from drug makers Eli Lilly (NYSE:LLY) and Merck & Co. (NYSE:MRK), and from the second largest American bank, Bank of America (NYSE:BAC). Bank of America shares were lower after the regular opening, down about 2.5% as investors appear less willing to extend an olive branch to sluggish results, especially compared to the reaction last week that was seen on Citigroup’s (NYSE:C) earnings.

As for the drug makers, the news was mixed, with Eli Lilly tumbling about 4.5% on sloppy results, while Merck slipped about 0.1% despite beating the estimate.

Among small caps, Packeteer Inc. (Nasdaq:PKTR) is rising more than 12% on news that the company was set for acquisition, and North American Galvanizing & Co. (Nasdaq:NGA) was up about 7% into the opening as the company topped earnings forecasts.

On the downside, Aladdin Knowledge Systems Inc. (Nasdaq:ALDN) tumbled about 27% after missing the earnings forecast. MedCath Corp. (Nasdaq:MDTH) is down about 17% after the Charlotte, N.C.-based health-care provider estimated its second-quarter and fiscal 2008 earnings far below Wall Street expectations.

Small-cap stocks began Monday in the red: at 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was down 2.67, or 0.37% at 718.40. The index’s early low was at 716.72, slipping through the first line of defense from Friday’s big rally at 718, and now faces short-term chart support at 714, then down at 709.

The focal point early this week will likely be on earnings news and the credit crunch. Overseas, the Bank of England announced the opening of a credit window that would allow banks to swap out risky mortgage debt for U.K. government bonds, a similar function to what the Federal Reserve did several weeks ago to help bail out limping financial firms. The immediate response from European equities was lukewarm, however, so it may take more time to play out. The uncertain response to the Bank of England’s move means that the credit issue will likely remain on trader radar screens early this week.

The U.S. dollar was lower overnight, and crude oil shot to yet another record high price, which clearly puts a little bit of a damper on bullish psychology from last week’s big surge in small caps. The Lundberg survey of some 7,000 gas stations reported a new high pump price of $3.47 per gallon, up $0.04 from two weeks ago. Combine record oil prices with soaring food prices, sluggish home values and . . .

Shares of North American Galvanizing & Coatings, Inc. (Nasdaq:NGA) are gaining ground ahead of the opening bell after the provider of galvanizing and coatings for corrosion protection of fabricated steel products reported first-quarter earnings that beat the consensus on Wall Street, while revenues met.

Shares gained 10.6%, or $0.57, to $5.95 ahead of the bell. For detailed price information and recent news stories about North American Galvanizing, click NGA. 

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Packeteer Inc. (Nasdaq:PKTR) up 13% on news that it will be acquired by Blue Coat Systems for $268 million.

• North American Galvanizing & Coatings Inc. (Nasdaq:NGA), up 10% on news that first-quarter earnings beat the consensus on Wall Street, while revenues met.

• Shengdatech, Inc. (Nasdaq:SDTH), up 4%.

Biggest percentage losers:

• Aladdin Knowledge Systems Ltd. (Nasdaq:ALDN) down 11% on news that it reported first-quarter earnings that missed analysts’ estimates by a penny and news that it lowered its fiscal 2008 earnings estimate.

• TierOne Corp. (Nasdaq:TONE), down 2%.

• Hoku Scientific, Inc. (Nasdaq:HOKU), down 1.5%.

The Russell 2000 (NYSE: IWM) managed a late-minute razor-thin gain while the major U.S. indices made solid advances on news of strong earnings and speculation of a rate cut. The small-cap index added 0.33 points, or 0.04%, to 821.72. The Dow Jones Industrial Average (INDU) gained 63.56 points, or 0.46%, to 13,870.26.

On a year-to-date basis, the Russell 2000 has increased 4.36%, while the Dow has added 11.19% and the S&P 500 has gained 8.78%.

The small-cap futures were pointing up before the start of trading following news that New York-based Verizon Communications Inc. (NYSE: VZ), the second largest U.S. telecommunications company, reported that revenue for the third-quarter increased 5.8% to $23.8 billion from $22.5 billion a year earlier.

Contributing to the bullish sentiment were retailers RadioShack Corp. (NYSE: RSH) and Best Buy Co. Inc. (NYSE: BBY), which reported upbeat third-quarter earnings.

Among small-cap companies, North American Galvanizing & Coatings (Nasdaq: NGA) rose on news that third-quarter profit more than doubled, while compact construction equipment maker Gehl Co. (Nasdaq: GEHL) fell on news of a decline in profit.

The major U.S. indices opened in positive territory and stayed there throughout the session.

However, small-caps were the exception. The Russell 2000 moved up initially but quickly stumbled and stayed in negative territory during the majority of the session, battling back into the green with just minutes before the close.

The Russell 2000 (NYSE: IWM) is down after opening with modest gains as investors reacted to upbeat earnings news.

At 10:41 a.m. ET, the small-cap index was down 1.34 points, or 0.16%, to 820.05. The Dow Jones Industrial Average (INDU) had added 33.08 points, or 0.24%, to 13,839.78.

There is nothing major being released on the economic front today, so all eyes are focused on the latest corporate earnings.

Verizon Communications Inc. (NYSE: VZ), the second largest U.S. telecommunications company, announced before the opening that revenue for the third-quarter increased 5.8% to $23.8 billion from $22.5 billion a year earlier. However, net income declined by 34% to $1.27 billion, compared with $1.92 billion during the third quarter of 2006.

Computer maker Dell Inc. (Nasdaq: DELL) also contributed to the bullish sentiment when it said that it would consider making more acquisitions. Round Rock, Texas-based Dell has acquired five companies in the past two years.

The Russell 2000 opened in positive territory, but unexpectedly fell after about 10:15 a.m. ET.

Among small-cap companies, Gehl Co. (Nasdaq: GEHL) is down on news that the maker of compact construction equipment reported a decline in third-quarter income. Meanwhile, North American Galvanizing & Coatings (Nasdaq: NGA) is gaining ground on news before the start of trading that third-quarter profit more than doubled.

North American Galvanizing & Coatings (Nasdaq: NGA) shares are up in pre-market trading after the Tulsa, Okla.-based firm reported third-quarter net earnings of $2.5 million, or $0.20 per share, up from $1.1 million, or $0.09 per share, a year earlier.

The company’s net sales for the three months ended Sept. 30 totaled $21.54 million, from $20.15 million during the same period of 2006. North American Galvanizing’s quarterly costs and expenses fell to $17.6 million, from $18 million during the prior-year period.

The firm also said it completed the move to the Nasdaq stock market on Aug. 2 without an interruption in trading activity. During the third quarter, the company bought 28,500 of its shares in open market transactions at an average price of $5.33 per share. The firm’s buyback program has $600,000 left in its balance.

In pre-market trading, NGA shares are up 12.65%, or $1.09, at $9.70. Over the last 52 weeks, shares have ranged from $2.96 to $11.97.

52-week low / high: $2.94 / $11.97
Shares Outstanding:  12.35 million
Market Capitalization:  $76.47 million

As the name implies, North American Galvanizing & Coatings, Inc. (Nasdaq: NGA) is a service business focused on galvanizing and coatings (immersing prefabricated client components, iron and steel products, in molten zinc).

The company operates through its wholly owned subsidiary North American Galvanizing Company, and Galv-Ohio, Inc., an indirect subsidiary formed from the assets of Gregory Industries, Canton, Ohio.

NAG’s other services include sandblasting, metalizing (flame sprayed), centrifuge spinner galvanizing, Corrocote Classic II painting and INFRASHIELDsm Coating. NAG’s operations encompass 11 plants in seven states from Ohio, Tennessee and Missouri to Texas, Oklahoma, Kentucky and Colorado.

Galvanizing provides corrosion protection to fabricated steel for use in a variety of markets, including petrochemicals, highway and transportation construction, utilities, communications, and a myriad of other applications. The company has over 1,700 customers nationwide.

Revenues for the year ended Dec. 31, 2006, were $74 million, up 54.7% from $47.9 million in 2005.

For the first six months of 2007, net earnings were $4.5 million, or $0.36 per share, versus $2.4 million, or $0.20 per share, for the first six months of 2006. Once again, a decidedly unsexy industry delivers some titillating profit opportunities.

NovaStar Financial Inc. (NYSE: NFI), Servotronics, Inc. (AMEX: SVT) and Idaho General Mines Inc. (AMEX: GMO) are among the biggest percentage gainers in Wednesday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

On lowered expenses, wood wholesaler Jewett-Cameron Trading Co Ltd. (Nasdaq: JCTCF) reported higher third-quarter income.

Sify Ltd. (Nasdaq: SIFY) reported it is partnering with Microsoft (Nasdaq: MSFT) to bring Internet and information technology services to India.

Investment firm William Blair & Company initiated research coverage of advertising and marketing company MDC Partners Inc. (Nasdaq: MDCA) with an “outperform” rating.

These are the biggest percentage gainers in Thursday's trading among companies with market capitalizations under $500 million:

Datalink Corp. (Nasdaq: DTLK) slashed its second-quarter earnings outlook to a loss of between $0.03 and $0.05 per share. Previously, the computer storage company had expected earnings-per-share of between $0.02 and $0.07. Wall Street analysts are expecting earnings-per-share of $0.06.

Electronics and microwave components company Anaren, Inc. (Nasdaq: ANEN) announced that accounting mishaps at its Chinese subsidiary may cause the company to restate its second and third quarter results.

These are the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $500 million:

Atlantic City, N.J.-based Trump Entertainment Resorts, Inc. (Nasdaq: TRMP) said negotiations with potential buyers have terminated with no acquirer in sight.

Marketing software maker Unica Corp. (Nasdaq: UNCA) dismissed its auditor Ernst and Young LLP and was subsequently downgraded to “sell” from “neutral” by Ferris Baker Watts. The Waltham, Mass.-based company provided no reason for dismissing its auditor.

These are the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million:

B. Riley & Co. downgraded footwear retailer The Finish Line, Inc. (Nasdaq: FINL) to “neutral” from “buy” with a target price of $15, from $13.

Vical Inc. (Nasdaq: VICL) reported that preliminary late-stage trial results showed a drug candidate successfully treated the blood flow disease ischemia by increasing the size of blood vessels.

These are the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $500 million:

Solar cell maker Amtech Systems, Inc. (Nasdaq: ASYS) reported it has received $16.5 million in orders from Asia.

Urstadt Biddle Properties Inc. (NYSE: UBA) declared quarterly dividends of $0.23 for class A common stock and $0.20 for regular common stock. The dividends are payable on July 20.

These are the biggest percentage gainers in Wednesday's trading among companies with market capitalizations under $500 million:

Rodman & Renshaw maintained its "market perform" rating on biopharmaceutical company Medivation, Inc. (Nasdaq: MDVN).

Cyberonics, Inc. (Nasdaq: CYBX) reported a wider quarterly loss and revenue that didn’t meet analysts’ expectations.

Three patients in Idenix Pharmaceuticals, Inc. (Nasdaq: IDIX) hepatitis C study had to discontinue due to what Idenix described as "adverse events," related to problems with toxicity.

AeroCentury Corp. (AMEX: ACY) shares are down after two of the company’s directors reported in SEC filings today and Wednesday that they disposed of 770 shares.

Arrowhead Research Corp. (Nasdaq: ARWR) shares are down more than 5% after the biotech company announced Friday morning that interim Phase I data had been published on its anti-cancer drug IT-101. The data was published in the 2007 American Society for Clinical Oncology Proceedings. In the article, the authors wrote that “the stable disease rate, although not yet conclusive, is consistent with promising efficacy.”

These are the biggest percentage losers in Friday's trading among companies with market capitalizations under $500 million:

U.S. stocks are trading close to the flat line after the open, following news of major developments on the merger and acquisition front.

At 10:05 a.m. ET the Russell 2000 was up 2.88 points, or 0.35 percent, to 826.54.  Dow Jones Industrial Average was down 2.44 points, or 0.02 percent, to 13,558.97.

General Electric Co. (NYSE: GE) has agreed to sell its plastics business to Saudi Arabian chemicals company Saudi Basic Industries Corp. for $11.6 billion in cash.  News of the deal first broke on Friday, May 18.  GE is set to receive $9 billion in after-tax proceeds.

In other business news, private equity group Blackstone Group LP will go public and raise $7.75 billion by selling stock to the general public and the Chinese government.  Blackstone will offer as many as 153.3 million shares for $29 to $31 each to raise $4.75 billion, and give an 8% share to the Chinese government for $3 billion.