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U.S. stocks are expected to start the week out flat to slightly higher, underpinned by gains in commodity stocks following overnight advances in crude oil and gold. Energy markets were lifted by geopolitical tension in the Middle East following three days of air strikes in Gaza by Israeli forces. Merger activity in Asia lifted insurers and tech stocks, while automakers were firm in Europe, but the cancellation of a big joint venture between Dow Chemical Co. (NYSE:DOW) and the Kuwaiti government could pull the rug out of plans Dow had to purchase Rohm & Haas Co. (NYSE:ROH), which hurt both stocks in pre-market trading. The Dow was expected to open about 25 points higher, while the Russell 2000 (NYSE:IWM) was seen opening up 0.3% near 478.00.

Small-cap stocks weathered several storms today to punch out a higher close as investors were able to look past a sudden reversal higher in crude oil futures, renewed credit crunch worries amid a collapse in mortgage finance stocks and safe-haven money flow into short-dated treasury products. Oversold conditions and bargain hunting spurred by merger activity were enough to pull small-cap stocks into the green. The Russell 2000 (NYSE:IWM) rose 6.68, or 1.01%, to 670.44.

Heading through midday trading, the market tried to carve out a modest recovery rally in the wake of Wednesday’s big collapse, but a sudden afternoon surge in crude oil prices stomped out bullish sentiment in equities — at least for a while. Crude oil prices charged more than $5 a barrel higher, climbing back above $141 on supply concerns out of Africa and Brazil and amid ongoing tension in the Middle East.

Workers in Brazil threatened to initiate a five-day strike next week, while a ceasefire in Nigeria threatened supply from Africa. Meanwhile, Iran said it has been test-firing more missiles, as a “lesson for enemies;” U.S. officials warned Iran that it would defend its allies. The potential for supply disruption and geopolitical tension was enough to spark the sudden resurgence in crude oil prices, which had tumbled some $10 a barrel off recent record highs.

S&P 500 futures actually made their daily high this morning before the regular market even opened, rising to highs in conjunction with a better-than-expected headline figure on the weekly jobless claims report. The report showed a decline in claims to 346,000 which was much better than the 395,000 forecast and a big improvement on last week’s 404,000 figure. However, there were some “devils in the details” of the data, which hinted that all is not well in the labor market.

“Continuing claims, which lag initial claims by one week, rose 91,000 to 3.202 million. The insured unemployment rate moved up to 2.4% from 2.3% in the prior week. The insured unemployment rate has held at 2.4% in three out of the last five weeks. The noticeable decline in initial claims is a distortion and is not an indicator of a market improvement in labor market conditions,” Asha Bangalore, economist . . .

After a rocky finish to Wednesday’s trading, small-cap stocks are slightly higher midday Thursday on encouraging congressional testimony from Federal Reserve Chairman Ben Bernanke, though woes in the U.S. mortgage and housing industries continue to pressure stocks.

At 1:14 p.m. ET, the Russell 2000 (NYSE:IWM) was up 7.50, or 1.13%, at 671.25, while the Dow was up 63.43, or 0.57%, at 11,210.87.

Bernanke spoke before the House Financial Services Committee and encouraged the government to update its outdated financial regulation system. Bernanke, along with Treasury Secretary Henry Paulson, urged the government to create a safety net that would minimize a failing bank’s impact on the broader economy.

"In light of the Bear Stearns episode, Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy, together with a more formal process for deciding when to use those tools," Bernanke said.

Paulson added that major mortgage lenders Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) will be able to recover from this rough patch, and that he had been informed that both Fannie and Freddie have enough capital. Shares of the mortgage companies sank by midday, though, with Fannie Mae falling 10% and Freddie Mac skidding 20%. The mortgage giants’ woes dragged down many financial stocks amid worries the banking crisis is far from over.

Not helping calm investors was a RealtyTrac Inc. report early in the day that showed U.S. foreclosure filings grew 53% in June from the prior year. Bank repossessions soared the most since the company began collecting data in 2005.

Small-cap stocks pushed higher in morning trade, overcoming ongoing fears about the credit crunch, particularly as they relate to slumping home financing providers Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 4.84, or 0.70%, at 668.39. Shortly after the open, FNM shares collapsed 16%, while FRE was down 18%.

Buyers in the stock market seemed to gain some confidence on news that Federal Reserve Chairman Ben Bernanke’s congressional testimony today will show that the central bank remains focused on financial market turmoil. Wire service reports said that Bernanke would push to let the government “liquidate” any major firm on the cusp of bankruptcy.

The morning seemed full of promise just one hour before the regular opening, with stock index futures charging higher on M&A news, an improved outlook from consumer barometer Wal-Mart (NYSE:WMT) and a bullish surprise on the headline weekly claims report. However, the market turned south about 30 minutes ahead of the open as the credit crunch jitters overtook investor psychology amid talk that FNM and FRE were approaching insolvency. Spreads traded on the firms in the debt market widened substantially after former Federal Reserve official William Poole said the firms may need to be bailed out.

Stock index futures made the overnight high when the weekly claims report came out at 346,000, which was much better than the forecast for 395,000, and which should have alleviated some of the recession fears fanned by last week’s stunning 404,000 claims report. However, continuing claims remained above 3 million, which underscores a difficult labor market picture.

Wal-Mart’s June same-store sales jumped 5.8%, which surpassed analyst expectations for a rise of 3.8%. The retailer followed up the strong sales news by raising their second-quarter outlook, which sparked a rally in overnight trading in WMT, but the stock was basically flat early on today after the open. There is some concern that the bump in WMT June sales may have been bolstered artificially by the fiscal . . .

Small-cap stocks are expected to open higher, lifted by merger and acquisition news on the large-cap front, and by a rosier outlook from discount retailing giant Wal-Mart (NYSE:WMT). The Russell 2000 (NYSE:IWM) was expected to open about 0.5% higher, which would translate to an open near 667.

Wal-Mart’s June same-store sales jumped 5.8%, which surpassed analyst expectations for a rise of 3.8%. The retailer followed up the strong sales news by raising their second-quarter outlook, which sparked a rally in overnight trading in WMT.

On the M&A front, news that Dow Chemical (NYSE:DOW) said it would purchase Rohm and Haas (NYSE:ROH) for $18.8 billion. This type of acquisition activity suggests that there are bargains to be found and bolsters investor psychology about the outlook.

Stock index futures briefly extended overnight gains ahead of the opening when weekly jobless claims came in at 346,000, which was far better than the forecast for a dip to 395,000 from last week’s stunning 404,000 number. Despite the bullish surprise on the headline number, it was still the eleventh consecutive week in which continuous claims were above 3 million, which is a troubling figure for the overall labor market. Within a few minutes of the claims release, futures were back . . .

With a high strength-to-weight ratio, titanium may be the element investors need to up the robustness of their holdings.

Rising demand has caused titanium prices to more than double over the past three years and shares of titanium producers have flourished, especially in the case of Dynamic Materials Corporation (Nasdaq:BOOM) and Brush Engineered Materials Inc. (NYSE:BW). These companies meld titanium with less expensive metals to create so-called clad metals offering titanium’s strength and corrosion-resistance at a more affordable price. 

Once thought exotic, titanium is now frequently sought by engineers in the energy, chemical, industrial and electronics industries because stricter emissions standards have forced industry players to raise processing temperatures and use corrosion-resistant metals in equipment designs. In addition to being corrosion-resistant, titanium is as strong as steel, about 45% lighter and offers superior thermal and conductive qualities. Clad metals also allow manufacturers to maintain delivery schedules when titanium is in short supply since less prime metal is used.

Dynamic Materials is the world’s leading provider of explosion-clad metal plating. This process uses an explosive charge to bond metals that can not be joined by welding. Clad metal plates consist of a thin layer of corrosion-resistant metal (such as titanium) bonded with a thicker, less expensive base metal such as carbon steel. Rising capital investment and equipment demand in the energy, refining, mineral processing . . .

Boulder, Colo.-based Dynamic Materials Corp. (Nasdaq: BOOM) is a leader in the explosion-welded clad metals market (a segment specializing in using an explosive process to fuse non-compatible metals—which cannot be welded by conventional processes—creating bonds that are stronger than the metals themselves). Dynamic Materials has made shrewd moves in the past few years, including key acquisitions in the United States and Europe. Today, the company controls as much as 40% of worldwide market share (predominantly in North America and Europe), though it still faces competition in Asia from Japanese player Ashai Kasei Corp. (OTC: AHKSY) and several Chinese companies.

Dynamic Materials supplies a diverse customer base, ranging from energy companies to shipbuilders to the aerospace industry. Key customers include Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), General Electric Co. (NYSE: GE) subsidiaries GE Energy and GE-Aviation, Rohm & Haas Co. (NYSE: ROH), divisions of United Technologies Corp. (NYSE: UTX) Betchel, and Pratt & Whitney.

The year 2006 was good to Dynamic Materials. The company saw profits rise 42% with revenue growth of 30% (its stock has averaged annual returns of 208% over the past three years), earning it a seat on Fortune's 2006 list of the “100 Fastest-Growing Companies.” After a banner year, Debra Fiakas, CFA, an analyst with Crystal Equity Research, said her firm initiated coverage of Dynamic Materials “based on its growing dominance of the metals cladding market. Strong cash flow generation and a pristine balance sheet provide resources for future growth initiatives."

DMC's revenues totaled $33.1 million in the first quarter of 2007, a year-over-year increase of 32%. The company's backlog in the first quarter was $68 million, compared with just $34 million two years earlier. A record backlog is expected in the second quarter. These impressive numbers have helped propel Dynamic Materials to the eighth spot on Business Week's annual list of “100 Hot Growth Companies.”

Nanotechnology, a broad field that essentially means the ability to create specifically designed compounds a few nanometers in size, has for many years been hailed as the next great breakthrough for solving a plethora of the world’s problems. At this size, the electrical, chemical and optical properties of the compounds are radically transformed, promising such things as more efficient electronic circuits, longer-lived batteries, improved drug-delivery systems, engineered biofuels, better lasers and more advanced imaging equipment.

But so far, successful commercial products based on the technology have been harder to find than a nanocrystal under a microscope. Nanophase Technologies Corporation (Nasdaq: NANX,) founded in the late 1990s, has for the last several years been focused on getting real products to market rather than on simply creating new nanoparticles. It has partnerships with BASF, Rohm & Haas Company (NYSE: ROH), health care companies and others, through which it has developed more than 200 commercial products. Those products are now being used to create semiconductors with fewer flaws, better fuel cells, scratch-resistant and microbe-resistant coatings, and even better sunscreens and deodorants.

In April, it announced a new deal with Behr, a premium paint company that is using its nanoparticles to make a paint that resists mildew, has better adhesion and requires no primer. The paint will go on sale at The Home Depot, Inc.’s (NYSE: HD) stores soon. Last December Nanophase also signed a deal with a German company to produce a transparent coating that protects automobile paint from scratching.

Several analysts are hoping that signals a turning point for the company’s profitability and long-stagnant stock. Nikolay Tishchenko at Crown Global Capital, sees the potential for 30% to 50% annual revenue growth for Nanophase for the next several years. “Nanotechnology is breaking out of its limited applications and is at the early stage of exponential growth,” he says. “I like the company’s management and business model.”