Are your top three investing goals capital preservation, to generate income and growth – in that order? Well, look further than covered calls.

The question is repeatedly pondered: What is the secret to Warren Buffett's breathtaking investing success? 

A little over a month ago Warren Buffett, the world’s foremost investor, announced that he wants to buy back an unlimited number of shares in his own company, Berkshire Hathaway (NYSE: BRK-A, NYSE: BRK-B) – a promising sign for both Berkshire and the financial markets as a whole.

Stocks traded downward today with fresh worries about the economy. Stocks put in their steepest decline in six weeks with nearly all industries getting pulled down on investor concerns of consumer reluctance to spend. Indeed, American consumers have closed their wallets so tightly that the personal savings rate, as released by the Bureau of Economic Analysis, was over 5% at the end of Q2 2009. This contrasts to 1% at the beginning of the economic downturn.

The Dow closed down 186 to finish at 9,136 with Alcoa (NYSE:AA), American Express (NYSE:AXP), Caterpiller (NYSE:CAT), and DuPont (NYSE:DD) the leaders in the declining stock prices in the index.

The Nasdaq finished the trading session at 1,931, down 55 points and the S&P 500 finished at 980, down 24 points.

The Russell 2000, a composite of leading small-cap stocks, ended the day at 548, down 16 points.

Small-cap price leaders today include Align Technology (Nasdaq:ALGN), up 29%; Protalix BioTherapeutics, (Amex:PLX), up 11%; and CryoLife (NYSE:CRY), 10%.
 
*****30 Hour work week the new normal

Economic analysts were out in full force last week as headline data pointed to a recovery in employment. Although people may have started finding jobs, we question the quality of work being found by new workers.

After the Japanese financial crisis in the late 1980s, many of Japanese workers ended up working on temporary jobs that didn't have good salaries and benefits. Perhaps the U.S. is entering a similar phase.

Over the past year and a half companies have slashed budgets and expenses. Businesses are more likely to hire low cost temporary help until the economy starts to show significant changes. Part-time jobs usually have lower pay and part-time jobs don't have many of the benefits that full-time jobs have.

In past recessions, businesses would hang onto valued employees and many times increase their salary levels. This recession has proven different. There is a large number of highly educated people competing for menial jobs. This has given businesses an opportunity to hire skilled workers at bargain rates.

*****An insider's look at the housing numbers.

Inside Mortgage Finance sponsored a nationwide survey of 1,556 real-estate agents in mid-June. Their results bring up important data that contradicts many of the figures we have been reading in the past few weeks.
They unanimously acknowledge that the low end of the market is cranking. This area of the market is primarily driven by foreclosures, first-time buyers, and investors. The numbers show that near 43% of homebuyers are first-time homebuyers, 29% are current homeowners, and another 29% are investors. 
Unfortunately, their findings show that the high end of the market is dead. This area of the real estate market remains very weak because sellers are still in denial, existing homeowners aren't trading up, and there are fewer foreclosures and forced sales at the high end.

For those who already own houses, "affordability" is not a particularly meaningful measure of housing-market health. The main reason is because existing home owners cannot sell their current property at break-even levels, let alone a little profit.

*****No Inflation

Last week CPI came in about as expected. Although prices are rising slightly, CPI remains negative taking into account year over year changes.

A sign of confidence that U.S. inflation should remain under control is that foreign governments have been switching out of shorter-term U.S. government bills and into longer-dated bonds. Last week, when the U.S. government issued $75 billion in new bonds, 10-year notes made up the largest percentage since 2005.

*****Managed America

So there's where we are: shorter work weeks (read: less take-home pay), home values gone bust, homeowners stuck in their homes, and inflation initially non-existent. These are some of the themes I recently shared with investors in my Managed America: Investing in the New Economic Reality. During the presentation I shared with investors some of our top holding for the new economy and the strategies we'll employ for profits in the months and years ahead. The presentation is in replay mode and is open access (free): click HERE to watch now.

Regards,

Ian Wyatt
Editor
Small Cap Investor Daily

 

Stocks continued their slide today as traders are holding tight until they get the Fed's word on the economy. Bernanke & Co. are expected to wrap things up tomorrow, so we could see another round of lower closing prices. 

The Dow closed down 96.50 points at 9,241.45; the Nasdaq finished at 1,969.73, down 22.51; and the S&P 500 fell back below 1,000 to finish the day's session at 994.35, down 12.75 points. 

Stocks in the Russell 2000 were down 9.75 points to end at 562.12. 

Oil closed at $69.38, down $1.22 and gold was at $946.20, up $1.20.
Bucking the downward trend were small-caps like Avanir Pharmaceuticals (Nasdaq:AVNR) up 30%; EchoStar (Nasdaq:SATS) up 19%; and Ivanhoe Energy (Nasdaq:IVAN) up 15%.  

Trending down with the broader markets many small-cap outpaced the market's fall, including Anthracite Capital (NYSE:AHR), down 30%; Javelin Pharamceutical (Amex:JAV), down 27%; Petroleum Development (Nasdaq:PETD), down 22%; and Flotek Industries (NYSE:FTK), down 20%. 

*****Have you noticed that analysts are starting to downgrade stocks? Sprint Nextel (NYSE:S), Yum Brands (NYSE:YUM), PETsMART (Nasdaq:PETM), MBIA (NYSE:MBI) and Aegon (NYSE:AEG) were all marked down by analysts yesterday.  
Coverage was initiated on American Express (NYSE:AXP) at "Sell" by Ladenburg Thalman. Boeing (NYSE:BA) and Research in Motion (Nasdaq:RIMM) have also been downgraded in the last few days.  

So what gives? If everyone's so bullish right now, why are stocks getting downgraded?  
First, stocks have rallied strongly since March. And second, there's no guarantee that earnings can continue to rise. The analysts may be playing it safe, but investors should take note.  

*****AIG (NYSE:AIG) has doubled in the last three days. If there was ever a company that shouldn't double, it's AIG. The government owns something like 90% of the company. And it's actively selling off its important pieces to pay off debt. It's highly unlikely there will be any return for common shareholders.  

And if a completely speculative stock like AIG is moving, we might expect to see others. And sure enough, General Motors, which now carries the ominous name Motors Liquidation Company (MTLQQ.PK), has very nearly doubled in the last week. I don't think that's a good sign for the health of the stock market.

*****Word is that more traders think the dollar may have put in an important low. That would be bad for stocks and commodities. To follow the action, watch the iShares Barclay's 20+ Treasury Bond Fund (TLT).

When this ETF rallies, stocks are usually selling off. And the chart for TLT shows a pretty decent looking double bottom at $90.

*****The latest FOMC meeting starts today. Nobody really expects the Fed to raise interest rates. Even the inflation crowd has to admit that the economic recovery is too frail for higher rates. Still, judging by the declines in the stock market, investors are nervous about what the Fed has to say.

Alan Greenspan used to try to let his words act as monetary policy. Instead of actually moving rates, he would voice his bearish opinion, in the hope that he could keep a lid on asset prices.

It didn't work. And I hope Bernanke doesn't make the same mistake. There's no substitute for actual changes in rates. And despite the weak economy, investors could probably use a message about asset bubbles and risk.  

*****The Managed America Internet video conference aired last night with great success. You can still catch it if you missed. There's a replay available HERE if you're interested in discovering the trends that will affect your investments for the next couple of years and how you can profit from them.

Ian Wyatt
Editor
Daily Profit

P.S. Investors have been asking me about commodities plays. They know that long term inflation will kick in once the recovery starts to ramp up and that will drive commodities, and the share prices of the underlying stocks, through the roof. My Global Commodity Investing advisory service is benefiting from current commodity prices and will provide one of the only safe havens for profits when inflation picks up. Click here to find out more about Global Commodity Investing.

 

Small Caps putting up the biggest gains at press time (2:30 P.M. Eastern) include La-Z-Boy (NYSE:LZB) up 36.2% after an upgrade to strong buy from Raymond James, Atlas Pipeline Holdings (NYSE:AHD) up 30.2% after announcing a joint venture with Williams (NYSE:WMB) to expand Atlas's presence in Pennsylvania, Tivo (Nasdaq:TIVO) up 51.1%, Human Genome Sciences (Nasdaq:HGSI) up 16.7%, and Applied Signal Technology (Nasdaq:APSG) up 16%.

Big decliners include energy darling Valero (NYSE:VLO) down 18.3%, CVR Energy (NYSE:CVI) down 17.4%, Frontier Oil (NYSE:FTO) down 14.9% as crude oil inventories spike to 2.9 million barrels based on data from the U.S. Energy Information Administration.

Yesterday's darling stock, Green Plains Renewable Energy (Nasdaq:GPRE) was one of today's dogs lose 16.2% as volume slows from Monday and Tuesday's trading sessions.

As of press time (2:30 P.M. Eastern) all major indices are off with the S&P 500 leading the decline by a 2.0% drop, followed by the Dow sloughing off 1.5% and the Nasdaq down 1.4%. The Russell 2000 Index, comprised of the 2,000 largest small cap stocks was down 8.5 points, or 1.61% to 518.13.

*****Russia is grumbling. Seems they are not happy that rising debt, slow growth and record Treasury bond sales are dragging the U.S. dollar down. In fact, Russian president Medvedev is calling for some kind of global currency to replace the U.S dollar as the world's reserve currency. (Sound familiar? Like he's taking a page from the Chinese?)

In an interview with CNBC on Monday he said, "We need some kind of universal means of payment, which could create the basis of a future international financial system…"

Of course, this is a horrible idea. As one analyst put it, "It took decades for the euro to be established. I can only imagine how long it would take for the BRIC countries to put together a currency."

*****It's an investing truism that the financials always lead the stock market. Recall that it was bullish comments from Citigroup that kicked off this rally back in early march. And I'm sure nobody needs reminding that it was the financials that kicked off the worst bear market in 80 years.

When the S&P 500 and the Nasdaq blew through their 200-day moving averages on Monday, the financials were out in front. But today, even though the major indices finished with slight gains, many financials finished in the red.

American Express (NYSE:AXP) dropped nearly 5%. JP Morgan (NYSE:JPM) lost 4.46%. Wells Fargo (NYSE:WFC) lost 4% and Citigroup (NYSE:C) lost 4.88%.

Bank of America (NYSE:BAC) is about the only major financial stock to finish in the green, and that was a 1.7% gain. In fact, the Financials SPDR (AMEX:XLF) failed to make a new recovery high along with the Nasdaq and S&P 500.

So what gives? Why have the financials underperformed, and why were they weak today?

*****One clue comes from the Healthcare Select SPDR (AMEX:XLV). As you may know, healthcare stocks are considered defensive stocks. That's because their revenues are seen as being stable as healthcare is a necessary, as opposed to discretionary, expense.

In difficult markets, institutional investors will park their money in healthcare stocks as a way to maintain exposure, but lower risk.

If we compare the Healthcare SPDR XLV to the Financial SPDR XLF, we see an interesting divergence starting on May 8. Healthcare has been trending up since that date. And the Financial SPDR has been trending down. To me, this looks like sector rotation.

It appears that institutional investors are moving money out of aggressive financial investments and into defensive healthcare stocks. When the institutional investors start playing defense, individual investors should pay attention.

*****Technical analyst for TradeMaster Daily Stock Alerts, Jason Cimpl, thinks the rally has about another week before we start seeing some downside. And for good measure, he recommended that his readers take their 29% profits on Fushi Copperweld (Nasdaq:FSIN). This trade took less than 3 weeks. Nice job, Jason.

Jason is still holding the two stocks you may have learned about from the TradeMaster video I included in yesterday's Daily Profit. In case you entered either trade, you should know that Jason has recommended a stop loss for FXI at $35.15 and UNG at $12.60. If you missed the video, you can check it out HERE.

Stocks are seesawing this afternoon about housing construction data tumbled to a record low.

At 2:57 pm ET, the Russell 2000 (NYSE:IWM) is up 0.63%, while the Dow is up 0.27% and the S&P 500 is up 0.63%.

The Commerce Department reported this morning that the construction of homes and apartments fell 12.8% last month to the lowest pace on records dating back a half-century. Analysts were expecting a rise.

Small-cap semiconductor company Kulicke and Soffa Industries Inc. (Nasdaq:KLIC) is up 28% this afternoon after it increased its revenue outlook for the third fiscal quarter. Formula Systems (Nasdaq:FORTY) has climbed 23% after reporting a rise in Q1 profit, and Lifeway Foods Inc. (Nasdaq:LWAY) is 20% after reporting record first-quarter 2009 revenues and earnings.

*****Stocks are down this morning after a “surprise” drop in new housing starts and a fall in new building permit applications. This shouldn’t really be a surprise. After all, we are in a recovering economy, and that means progress will come in fits and starts. And since housing was the underlying cause of the last run-up and a major contributor to the market slide, there should be no question that we’ll see “surprises” like this going forward.

Recall that we’ve seen some upside surprises from the housing market in recent weeks. Yesterday’s big move was attributed, in part, to an improvement in a homebuilders confidence survey. A little bad news to balance out the good should be expected.

Still, the data from April represents a new all-time low for housing starts on an annualized basis. Year over year, housing starts are down 54%, and the housing market was already headed down then.

If there is a bright side, it’s in the understanding that economic sectors, like the stock market, have to bottom out before they can improve. We could be seeing the housing market bottoming out now.

Bell-weather homebuilder Toll Brothers (NYSE:TOL) reports tomorrow. Toll Brothers is a major player in new home construction so look to them as a bellwether . . .

Small-cap stocks pushed higher Tuesday, shrugging off record low consumer confidence as investors scavenged for bargains on beaten down bank and financial shares, hoping that President Obama’s pick to lead the Treasury will make quick moves to bolster bank balance sheets and mop up toxic assets. The Russell 2000 (NYSE:IWM) closed higher for the third consecutive session, gaining 5.53, or 1.23%, to 455.58. The Russell is still down 8.8% for the year, while the Dow is off 6.8% and the S&P 500 is down 6.3%.

Timothy Geithner – Obama’s nominee to head the Treasury Department – was finally confirmed by lawmakers late Monday and investors are hoping he will move rapidly to utilize government funds to help out banks. Obama himself even said today that the government will need to step up to help out banks with troubled assets, which was the original purpose of the TARP bailout plan before getting sidetracked during the waning days of the Bush Administration. The prospect of a “bad bank” set up to absorb troubled assets was back in play today, with Senate Banking Committee Chairman Chris Dodd saying the idea made “some sense.”

For the day, bank stocks were up 3.3%, while financial shares gained 3.5%. But the upside progress wasn’t necessarily spread all around as retail stocks, airlines and some commodity groups struggled. The S&P Retail Index dipped 1.3%, with home-related retailers struggling. The AMEX Airline Index tumbled 6.9%, with Delta Air Lines Inc. (NYSE:DAL), the world’s largest carrier, going into a 20% tailspin after releasing crummy earnings.

Gold stocks also took a nosedive today, and commodities in general were struggling, even though the U.S. dollar was pretty much flat against the euro and yen. The Commodity Research Bureau Index fell some 3% on the day, powered by a big decline in crude oil prices. The market for “black gold” tumbled 9%, or $4.15 a barrel, to $41.58, pressured by worries about demand amid the recession and . . .

Small-cap stocks are expected to open lower, pulled down by reports that Japan has officially entered into a recession for the first time in seven years and by disappointment that the G-20 meeting this weekend didn’t appear to serve up an exciting stimulus package. The world stock index slipped down 0.7%, powered by losses in Europe overnight. Stock index futures were off about 1% ahead of the opening, which would suggest a Russell 2000 (NYSE:IWM) open near 452.50.

Libor rates edged slightly higher overnight and have been correcting up slightly after going down every day for a month. The New York Manufacturing Survey came in at minus 25.4, which was slightly better than the forecast for a loss of 26.1. Still, the number was the worst showing on record (the data series began in July 2001).

On the corporate news front, Citigroup Inc. (NYSE:C) was off about 2% in pre-market trading on media reports that the giant bank plans to slash some 50,000 jobs. Also, tech bellwether Dell Inc. (Nasdaq:DELL) tumbled some 3% in European trading following analyst downgrades. Stocks with potentially bullish tilts include Charles Schwab Corp. (Nasdaq:SCHW) and Amercian Express Co. (NYSE:AXP) which could benefit from a bullish note in Barron’s. Colgate Palmolive Co. (NYSE:CL) received a bullish comment from analysts at Morningstar and ConocoPhillips (NYSE:COP) might get a rise from . . .

Small-cap stocks tumbled on the open, pulled down by spillover selling from a decline in overseas markets fueled by a weak tone in financial and commodity shares. At 10:00 a.m. ET, the Russell 2000 (NYSE:IWM) was down 11.42, or 2.32%, at 481.69.

Slumping energy and commodity values already took a toll on overseas equities heading toward this morning’s opening. Shares in emerging market countries that are heavily dependent on energy exports — such as Russia and Dubai — were down as much as 9% overnight. Around the world, stock were off 3% in Japan, Hong Kong was down 4.7%, China off 1.1%, Taiwan down 2.1%, Australia off 3.5%, Singapore down 4.1%, South Korea off 2.1% and India down a whopping 6.6%.

As for the crude oil, the market for black gold was down about $2 a barrel into the U.S. stock market opening and briefly printed below $60. Copper, which is considered a key economic indicator, slipped 3% in London and aluminum producer and Dow component Alcoa Inc. (NYSE:AA) said that they were slashing output in this difficult demand environment.

This morning’s soft tone on commodities certainly is a quick turnabout from Monday morning, when commodity markets were in rally mode in Asia and Europe. If you’re wondering why Monday’s “great news” rally out of Asia on China’s announcement to implement a $586 billion stimulus plan, Northern Trust’s James Pressler penned a great piece on the news, questioning how much of the plan was actually “new” stimulus and just how the money to pay for the plan would be raised.

“Given the vagaries of how much real spending was in yesterday’s announcement, we are hesitant to significantly modify China’s growth forecasts upward or downplay the many risks facing the country’s struggling export economy and encumbered financial system,” Pressler said in an email. “However, we do feel that the uncertainties regarding how China will pay this bill will haunt global markets. If Beijing simply issues 4 trillion (yuan) in debt to cover its tab, then the long-term impact would be a manageable domestic issue. However, if it considers liquidating any of its many U.S.-backed assets or no longer buying as much of our debt, this New Deal . . .

Small-cap stocks extended the morning rally into midday action, boosted by gains in commodity and financial stocks and some relief that the end was in sight for the political uncertainty surrounding elections in the United States. At 12:32 p.m. ET, the Russell 2000 (NYSE:IWM) was up 7.10, or 1.32%, at 545.60.

Even another downbeat reading on manufacturing activity today didn’t stall buying enthusiasm. Just a day after the ISM Manufacturing Survey came in at 38.9% -- well below the 50% contraction line -- today’s factory orders data came in at minus 2.5%, below the forecast for a drop of 1.5%. Although the market initially pulled back on the factory orders report, the rally quickly resumed and stretched out through mid-session.

Commodity shares were on a roll today, with agriculture products, metal and mining stocks, coal and gold all seeing sizable gains. The Energy Select Sector SPDR Fund was up 6% and crude oil prices shot 8% higher on reports that Saudi Arabia slashed output. Commodity stocks in general were lifted today by a sizable drop in the U.S. dollar, which tumbled some 2.8%, or more than 350 basis point against the euro, which makes goods priced in dollar terms more attractive. Among the big gainers were gold, copper and corn.

Soybean processor Archer Daniels Midland Co. (NYSE:ADM) jumped 17% on solid earnings, and other large-cap names getting an earnings lift today included MasterCard Inc. (NYSE:MA), which jumped 14% and lifted rival firm American Express Co. (NYSE:AXP) along for the ride, with AXP up about 5%.

Economic bellwether stock General Electric Co. (NYSE:GE) rose 8% . . .

Small caps continue to trade in the green midday, though off their highs of the session, after GDP was not as bad as feared. At 12:12 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.35, or 1.29% at 497.24.

Stocks are higher after a rally on Wednesday fizzled in the last minutes of trading. Trading kicked off on a positive note this morning after overseas markets rallied on the Fed rate cut and after today’s GDP report. GDP, a measure of all products and services produced in the U.S., slipped into negative territory, clocking in at minus 0.3%. The reading marked the steepest contraction in seven years and is consistent with recession readings. Despite the gloomy economic implications of the report, GDP wasn’t as bad as feared, as economists forecasted a dip of 0.5% in economic activity.

In other economic news, weekly claims figures came out and were slightly above the forecast, coming in at 479,000 versus expectations for 475,000.

“Economic activity contracted mildly in Q3 with large gains in net exports, inventory investment, and government spending being more than offset by significant weakness in consumer spending, residential investment, and business investment,” Steven Wood, chief economist with Insight Economics, said in an email. “Economic activity was also dampened in September by Hurricanes Gustav and Ike and by the strike at Boeing. However, the full effect of the credit crunch has yet to be felt. While the economy slipped in Q3 it will fall much more sharply in Q4. Our early estimate for Q4 is a decline of 3.5%.”

Consumer spending tumbled 3.1% in the third quarter, marking the first decline in 17 years. This report is yet another piece of economic data that points towards a consumer led recession. The consumer is the growth engine of the economy, as it accounts for two-thirds of economic growth; and with a soft consumer any hopes for economic recovery are short winded.  ...

Small-cap stocks gave back a sizable chunk of Monday’s big rally early on today, pressured by concerns that corporate profits are already sloppy and will be further strained by a weak economy going forward. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was down 8.46, or 1.55%, at 538.37.

With no economic reports on tap today, the market will focus on the wave of quarterly earnings coming in. Although the earnings news has been mixed so far, investors clearly are concerned that even the upside surprises were already tainted by very low projections or will be pinched to perform into what appears to be a difficult 2009.

The lift small caps enjoyed Monday from the energy sector appeared on the wane today, with crude oil prices slipping on concerns about demand. Also, commodities in general were likely to be on the defensive as the U.S. dollar was soaring against the euro, climbing 1.25%, which makes commodities priced in dollar terms more expensive (and less attractive to foreign buyers).

Around the world overnight, stocks were mixed, with Japan up 3.3%, Hong Kong down 1.8%, China off 0.8%, Taiwan up 0.2%, Australia up 3.8%, Singapore down 0.9%, South Korea down 1% and India up 4.5%. Europe was in positive territory on news that France would pour some 10.5 billion euros into the banking arena, but the early slide in the U.S. market pulled down Europe.

Back to the earnings story, the one that really seemed to sum up the market sentiment this morning was Texas Instruments Inc. (NYSE:TXN). TXN shares were off 9% shortly after the open as the company projected earnings for the upcoming quarter well below the forecast, which reflects the difficult operating environment for tech companies amid a slumping economy. Also in the tech arena, . . .

Small-cap stocks are expected to open lower, pulled down by a cautious tone amid a sea of earnings releases. Losses should be limited by another dip in Libor rates overnight, which hints at a thaw in frozen lending lines. Stock index futures were down about 1.3% overnight, which suggests an opening for the Russell 2000 (NYSE:IWM) near 540.

Earnings news was all over the board this morning, but investors are concerned that the coming quarters will continue to pinch profits as the economy limps into 2009 and consumers tighten spending.

Analysts at Goldman Sachs downgraded Citigroup Inc. (NYSE:C) to a “sell” rating, which could be a burden to bank and financial stocks this morning. C shares were off about 3% in pre-market trading. Within financials, there were positive stories this morning, including American Express Company (NYSE:AXP), which was up almost 4% after beating the estimate.

Amid the flood of earnings from last night to this morning, it appears the earnings news that has really stuck to the investor psyche came from Texas Instruments Inc. (NYSE:TXN) which warned that fourth-quarter results would miss the forecast. TXN shares were down about 8% in pre-market trading. Also, on the tech front, Sun Microsystems Inc. (Nasdaq:JAVA) was off about 9% in pre-market trading . . .

Small-cap stocks started out the week on a sour note, resuming the downward spiral in jolting fashion to post the largest one-day decline of 2008 as fears of a global financial pandemic triggered wave after wave of selling. The Russell 2000 (NYSE:IWM) shed 47.07, or 6.68%, to 657.72, the lowest daily close since March 17. For the year, small caps are down 14.1%, while the Dow is off 21.5% and the S&P 500 is down 24.1%.

The market woke up to news that Europe is now being forced to bail out financial institutions, as Fortis became the first eurozone bank to sag under the weight of global debt issues. European shares slumped to the lowest daily close in 3 ½ years, which set the tone for difficult day in U.S. stocks. When lawmakers in Washington shot down the $700-billion rescue plan for financial firms by a vote of 228 to 205, it extended the decline, with the S&P 500 plunging more than 8% at the intraday lows. The S&P 500 tumbled to the lowest point since October 2004 with dramatic declines in financial shares leading the way lower.

Within financials, Bank of America (NYSE:BAC) was off some 12%, and American Express Co. (NYSE:AXP) lost nearly 13%. Wachovia Bank (NYSE:WB) collapsed about 80% as the bank was forced to slough off most of its banking operations to Citigroup Inc. (NYSE:C), as Wachovia became the latest shocking failure in the on-going saga. The small-cap arena is heavily layered with mid- to small-tier banks, and even though the big-name firms are dominating the national headlines, these smaller firms are not immune to the financial contagion, which is reflected in the slide in the Russell 2000.

Technology shares struggled Friday on fears that political wrangling could jeopardize the financial rescue bill, and today’s rejection of the plan extended the woes for tech stocks as the Nasdaq 100 dropped more than 10%. Among tech stocks, Apple Inc. (Nasdaq:AAPL) was off some 16%, while bellwether Microsoft Corp. (Nasdaq:MSFT) was down about 4%.

Broad market sectors on the decline today were paced by financial, tech themes and even commodity firms. The biggest losses were seen in coal and steel stocks, but metals, asset management companies, oil refiners, regional banks and . . .

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 . . .

Small-cap stocks posted a solid rally Tuesday, bolstered by sinking crude oil prices, a strong dollar and enthusiasm over a steady spate of merger and acquisition activity. The Russell 2000 (NYSE:IWM) rose 19.19, or 2.75%, to 716.82, marking the 9th-largest one-day gain of the year.

The recovery bounce in stocks from a morning slide was clearly paced by small caps as the Russell 2000 moved into the green well ahead of its large-cap brethren — and even well before the crude oil collapse gained momentum.

“Crude was helpful to sectors in the market, but today’s action was also dominated by a wave of earnings. The lack of material downside follow through in the financial sector post Wachovia, Keycorp and American Express sparked a bid. The market was able to shrug off the initial bearish news with surprisingly little downside, which is a big positive. In addition, M&A activity is perking up,” said Nick Kalivas, vice president, financial research with MF Global.

Kalivas said that the deal by Brocade Communications Systems (Nasdaq:BRCD) to purchase Foundry Networks Inc. (Nasdaq:FDRY) helped secure a positive tone for the market, particularly in small caps. FDRY gapped higher on huge volume today, and added some 30% to its market cap on the news.

Several airline stocks are in the small- to mid-cap range, and those stocks really took flight today as crude oil tanked. The AMEX Airline Index shot 22% higher today, and small-cap carrier US Airways (NYSE:LCC) jumped a whopping 59% despite reporting huge — but not surprising — quarterly losses. Small-cap firm Alaska Air Group Inc. (NYSE:ALK) was up 19%, while JetBlue Airways Corp. (Nasdaq:JBLU) rallied 20% and UAL Corp. (Nasdaq:UAUA) gained some 63%.

As for crude oil, the market for black gold went into a tailspin, sinking some 3% to 6-week lows. Clearly, the rise in the U.S. dollar went hand-in-hand with the plunge in crude, but one could argue that the dollar rally also played in a role in pulling down commodity prices across many markets. For instance, corn was down 3%, sugar down 3%, orange juice down 2.7% and even gold reversed overnight gains to . . .

Small-cap stocks pushed lower on the opening, but edged back into the green about 30 minutes after the open as a slide in tech stocks and a turn for the worse for key financial shares was offset by money moving into small-cap commodity and consumer stocks. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 3.43, or 0.49%, at 694.20.

The tech-laden Nasdaq index bore the brunt of early selling interest, fueled by disappointing earnings results from benchmark companies like Apple Inc. (Nasdaq:AAPL) and Texas Instruments (NYSE:TXN), which were off 9% and 15% shortly after the open. Also, Vodafone Group (NYSE:VOD) slumped 13% as the mighty European-based mobile phone company lowered its outlook.

Within the financial arena, Wachovia Corp. (NYSE:WB) shed 10% early, snapping a run of positive surprises in the banking sector from recent days. WB, the fourth-largest U.S. bank, posted disappointing earnings, slashed dividends and announced sizable job cuts. Also, American Express (NYSE:AXP) was down 10% after missing the Street’s forecast, which triggered some analyst downgrades and a widening of credit default swap spreads (meaning it costs more to protect debt on the firm).

Comments this morning from Philadelphia Federal Reserve Bank President Charles Plosser had a decidedly hawkish tone and pulled down interest rate futures while supporting the U.S. dollar, but his remarks seemed to have a muted impact on stocks. Plosser said that “we will need to reverse course” on the policy front, and that the inflation picture is getting worse. Plosser is seen as one of the more hawkish members of the Fed and there seems to be a growing divide between policy members lately.

Goldman Sachs analyst Ed McKelvey addressed that very topic in a research report this morning titled “Mixed Messages from the Fed: Listen to Bernanke First.” Goldman’s McKelvey said that not all Fed officials are created equal and that the Bernanke Fed allows more dissent than typical policy boards. More importantly, the . . .

Small-cap stocks are expected to open sharply lower, pulled down by a spate of disappointing earnings, particularly in the tech sector. In addition, the recent run of bullish surprises on the banking front appears at risk on soft results from Wachovia Corp. (NYSE:WB). The Russell 2000 (NYSE:IWM) was off about 0.8% in overnight action, which would suggest an opening near 691.50.

On the tech front, bellwether Apple Inc. (Nasdaq:AAPL) was clobbered overnight, sinking some 9% when the maker of iPods projected forward earnings below the Street forecast. Vodafone Group PLC (NYSE:VOD) tumbled some 14% during European trading as the company lowered its outlook. Also, Texas Instruments (NYSE:TXN) failed to meet earnings projections and was off some 11% in after-hours trading. Heading into the open, the tech-laden Nasdaq futures market was flirting with 2% losses.

The banking sector has been rejuvenated in recent days by a string of positive earnings surprises, including Wells Fargo & Co. (NYSE:WFC), JP Morgan (NYSE:JPM), Citigroup (NYSE:C) and Bank of America (NYSE:BAC). However, that momentum should be halted today as shares in Wachovia Corp. (NYSE:WB), the fourth-largest U.S. bank, slumped 6% in overnight trading as the firm’s earnings disappointed and the bank slashed its dividend. Also in the financial sphere, American Express (NYSE:AXP) flirted with double-digit declines overnight after earnings missed . . .

Small-cap stocks pushed higher Friday, with the Russell 2000 (NYSE:IWM) rising 4.81, or 0.67%, to 721.88, which marked the highest daily close since Feb. 13. The market had a teeter-totter session, opening higher on earnings news and a firm dollar, then slumping on consumer sentiment jitters and soaring crude oil before staging the afternoon recovery.

Crude oil futures climbed to a record intraday peak Friday at $119.90 per barrel, lifted by supply concerns tied to worker strikes in Nigeria and the North Sea. The supply side concerns were complemented by news of warning shots fired on boats in the Gulf thought to be Iranian, underscoring tensions right now between the United States and Iran.

The market appeared set for a comfortable morning rise early today, but then the University of Michigan consumer sentiment survey cast a pall over buyer enthusiasm. The Michigan headline report came out at 62.6, down from 69.5 the previous month, and at the lowest April reading in 26 years. The dour consumer mood sparked a wave of selling across equity products, but the slide never really took hold and stocks were able to recover in the afternoon despite the Michigan survey and spiking crude values.

Speaking of economic data, this week’s report front was the quiet before next week’s storm. Not only will investors have to navigate a frothy sea of economic data risk —  highlighted by Friday’s employment report — but the FOMC meeting Tuesday afternoon could trigger a dramatic market response as everyone struggles to read the Federal Reserve “tea leaves” to see if the end of the easing cycle is nigh.

Back to today’s action, equities likely found some support tied to a solid performance in the U.S. dollar, which climbed about 0.6% against the euro, and was up nearly 0.3% against the yen. The fact that the greenback held onto gains versus the euro despite the jump in crude oil was impressive, as most of the time in recent . . .

Small-cap stocks pushed higher in early trading, but slipped into the red after sobering consumer sentiment figures from the University of Michigan. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 2.96, or 0.41%, at 714.12.

The University of Michigan’s consumer sentiment survey came in below expectations at 62.6% versus the median forecast of about 63.5%, and at 26-year lows, which appeared to spark a wave of selling across equities. The downside press after the Michigan numbers was a little surprising, because the survey seldom moves the market more than a few ticks. However, it may have simply been just an excuse for short-term longs to book profits ahead of the weekend instead of battling through key overhead chart resistance.

Once again, the market appeared to find initial buying interest on the back of earnings news, with American Express (NYSE:AXP) beating the forecast this morning, and climbing about 3% after the cash open. However, tech leader Microsoft (Nasdaq:MSFT) stumbled about 4% after the opening on sluggish earnings, so the news was mixed on some of the big name issues early today. Overseas stock market index products generated a nice rally, which provided a boost to investor psychology to start the session. European shares rose to three-week highs, while Japan’s Nikkei was up 2.3%.

President Bush held a very brief announcement about 15 minutes ahead of the stock market opening to let Americans know that their economic stimulus rebate checks were literally in the mail. The immediate response in stock futures trading . . .

Small-cap stocks were expected to open solidly higher Friday morning, in line with overnight gains on stock index futures. The Russell 2000 (NYSE:IWM) was up about 0.5% in after-hours trading, which would translate to a cash opening near 721.

The high for the recent move was at 723.86, just shy of key long-term chart resistance at 724. If that resistance area is tackled, then it would open the door for a run toward a double top from early February at 731. Looking at other major index products, the Dow already is at the highest price since January, and the S&P 500 is hovering about five handles below 1,400 in overnight trading, which could be an important figure test for the bulls.

Once again, overnight gains were fueled by solid earnings results, particularly in the financial sector, driven by American Express (NYSE:AXP), which was up about 3% following better-than-forecast results.

Overseas stock market trading also lent support to small caps, with European shares climbing to three-week highs, as the European DJ Stoxx 50 was up about 1.6% and Japan’s Nikkei up 2.3%. In addition, the dollar remained firm, and was . . .

www.visa.com
NYSE: V
Scheduled for week of Mar. 17
$16 billion proceeds
$30.8 billion post-money valuation

Finally, there’s a hot IPO. Visa, the king of the credit cards, is going public in the king of all IPOs, the biggest ever in the United States. The company, which operates the world’s largest electronic payments network used for credit and debit transactions, is currently held by a consortium of banks, and they are not selling their Class B and Class C shares. However, they may as well be, as $10 billion of the proceeds (structured as Class A shares) will be used to redeem some of their stock upon the offering. Another $3 billion of the proceeds will be put in escrow for litigation, and the rest will go to general corporate purposes.

The litigation allowance is a bit scary. Visa has four main suits against it, all of which allege different forms of antitrust. The suits have been filed separately by Discover Financial Services (NYSE: DFS), American Express Company (NYSE: AXP), a large group of merchants, and the fourth by a class of consumers. MasterCard Incorporated (NYSE: MA), which went public in 2006, had a similar list of litigation in its prospectus, but it hasn’t held the stock back. It was offered at $39 on May 24, 2006, and currently trades at $191.50. Visa’s betting that investors will see the MasterCard profits and want a chance at the same, lawyers be damned.

Lawsuits aside, Visa is nicely profitable. Pro-forma for the effects of post-IPO share redemptions, the company lost $861 million on $5.2 billion of revenue, although expenses include a $2.7 billion charge for settling litigation with American Express. Revenue was up 33% in 2007 to over the $3.9 billion posted in 2006, thanks in part to a 13% increase in the number of payments processed and a 22% increase in the cash value of these payments.

The Russell 2000 (IWM) and the other major U.S. indices closed with a loss following economic and financial news. The small-cap index let go 7.04 points, or 0.96%, to 723.46. The Dow Jones Industrial Average (INDU) declined 108.03 points, or 0.85%, to 12,635.16.

On a year-to-date basis, the Russell 2000 has lost 5.88%, while the Dow has retreated 4.75% and the S&P 500 has shed 5.96%.

Stocks small and large interrupted two days of solid gains today as investors consolidated their positions and reacted to news of a wave of downgrades in the financial sector.

Trading began on a bearish note and the Russell 2000 spent the entire session in negative territory following news that UBS AG (NYSE: UBS) downgraded credit card issuer American Express Co. (NYSE: AXP) to “sell” from “buy.”

McLean, Va.-based rival Capital One Financial Corp. (NYSE: COF) suffered the same fate, its stock downgraded to “sell” from “neutral” due to the possibility of a consumer-led recession and a rise in unemployment. The same goes for Discover Financial Services (NYSE: DFS), another card issuer.

As if all that was not enough to cement the bears’ dominance, Moody’s Investor Services suggested that it may downgrade a wholly-owned unit of Charlotte, N.C.-based bank Wachovia Corp. (NYSE: WB).

The Russell 2000 (NYSE: IWM) is sagging as investors consolidate previous gains and react to news from the financial sector. At 1:26 p.m. ET, the small-cap index had declined 5.88 points, or 0.80%, to 724.62. The Dow Jones Industrial Average (INDU) was missing 100.55 points, or 0.79%, to 12,642.64.

Stocks are in the red following two consecutive sessions of strong gains and investors apparently don’t see any reason for another buying spree.

The financial sector is looking gloomy on news before the opening that UBS AG (NYSE: UBS) downgraded credit card issuer American Express Co. (NYSE: AXP) to “sell” from “buy,” while Moody’s Investor Services suggested that it may do the same to a wholly-owned unit of Charlotte, N.C.-based Wachovia Corp. (NYSE: WB).

Meanwhile, the U.S. Census Bureau reported after the start of trading that new orders for manufactured goods increased a less-than-expected 2.3% in December.

The numbers represent the biggest jump since July but are below the 2.5% forecasted by economists. Factory orders increased an upwardly revised 1.7% in November.

Orders for durable goods, which are intended to last at least three years, jumped 5%, while orders for manufactured nondurable goods decreased 0.4%.

Leading the way down are retail stocks, while companies representing the energy sector are among the fastest gainers.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are in the red as investors sell financials and focus on the economy.

At 11:17 a.m. ET, the small-cap index was down 3.84 points, or 0.53%, to 726.66. The Dow Jones Industrial Average (INDU) had shed 41.46 points, or 0.33%, to 12,701.73.

New orders for manufactured goods increased 2.3% in December, the U.S. Census Bureau reported after the start of trading. That’s a rise of $10.1 billion to $441.6 billion.

The numbers represent the biggest jump since July but are nevertheless below the 2.5% forecasted by economists. Factory orders increased an upwardly revised 1.7% in November.

Orders for durable goods, which are intended to last at least three years, jumped 5% after a lackluster rise of 0.5% in November.

The data tells us that the manufacturing sector is holding up.

Contributing to the bearish sentiment is news before the start of trading that analysts suggest selling shares of banks and other financial companies.

Brokerage house Merrill Lynch & Co., Inc. (NYSE: MER) said that shares of Wells Fargo & Co. (NYSE: WFC) and Wachovia Corp. (NYSE: WB) are overpriced, while UBS AG (NYSE: UBS) downgraded American Express Co. (NYSE: AXP) to “sell” from “buy.”

Meanwhile, the White House released its proposed $3.1 trillion federal budget for fiscal 2009, which begins in October.

The Bush Administration expects the budget deficit to reach $410 billion in the current fiscal year and $407 billion in fiscal 2009. The deficit in fiscal 2007 was $162 billion.

The draft budget would make the 2001 and 2003 tax cuts permanent and close numerous government programs. However, it’s likely that the Democratic U.S. Congress will disregard many of the president’s proposals.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices began the day in negative territory.

At 9.55 a.m. ET, the small-cap index was down 7.09 points, or 0.97%, to 723.41. The Dow Jones Industrial Average (INDU) had declined 55.36 points, or 0.43%, to 12,687.83.

Stocks are down as investors are waiting for clues about the state of the U.S. economy.

The U.S. Census Bureau will release its report on December factory orders at 10 a.m. ET, about the same time as the scheduled unveiling of President Bush’s 2009 federal budget.

In corporate news, Humana Inc. (NYSE: HUM), the second-largest provider of U.S.-funded health benefits, reported a fourth-quarter profit of $243.2 million, or $1.43 per share, compared with $155 million, or $0.92 per share, a year earlier. The result beats analysts’ estimates and is due to higher enrollment in Medicare plans and lower medical expenses.

However, the financial sector is looking down following news that a unit of Wachovia Corp. (NYSE: WB) may be downgraded by Moody’s Investors Service. Similarly, shares of American Express Co. (NYSE: AXP) sagged in pre-market trading on news that UBS AG has recommended selling the stock.

The Russell 2000 (NYSE: IWM) futures are a hair below the closing level on Friday and the small-cap index will likely open down.

With little corporate or economic news, stocks have little incentive to move either way this morning.

Exciting the bulls is news that Humana Inc. (NYSE: HUM), the second-largest provider of U.S.-funded health benefits, reported a fourth-quarter profit of $243.2 million, or $1.43 per share, compared with $155 million, or $0.92 per share, a year earlier. The result beats analysts’ estimates and is due to higher enrollment in Medicare plans and lower medical expenses.

However, the financial sector is looking down following news that a unit of Wachovia Corp. (NYSE: WB) may be downgraded by Moody’s Investors Service. Similarly, shares of American Express Co. (NYSE: AXP) are sagging in pre-market trading on news that UBS AG has recommended selling the stock.

Investors will also be looking at figures on December factory orders, to be released by the U.S. Census Bureau at 10 a.m. ET, for more clues about the state of the economy.

The Russell 2000 (NYSE: IWM) posted a steep decline today on news of an unexpected decline in U.S. retail sales and a scare from the financial sector. The small-cap index tumbled 15.05 points, or 2.11%, to 697.43, its lowest closing level in more than one year. The Dow Jones Industrial Average (INDU) fell 277.04 points, or 2.17%, to 12,501.11.

On a year-to-date basis, the Russell 2000 is down 8.96%, while the Dow has lost 5.76% and the S&P 500 has retreated 5.95%.

The odds of a U.S. economic recession increased today and Wall Street responded with a major sell-off.

The bears dominated from the start of trading following news from the U.S. Census Bureau that retail sales in December fell 0.4%, defying expectations of a rise of 0.1%. Sales for November were revised down to a gain of 1% from an initially reported 1.2%.

Purchases excluding automobiles also surprised economists, falling 0.4% instead of posting an increase of 0.1%.

A pullback in consumer spending, which comprises about 70% of U.S. gross domestic product, is a scary development for an economy already besieged by stagnating home prices, higher energy costs and a tightening of credit.

So far this year we have seen the unemployment rate climb to 5% from 4.7% as hiring slowed down significantly in December 2007. It is perhaps not surprising then that on Monday credit card issuer American Express Co. (NYSE: AXP), announced that its card members have become more frugal.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices fell today on more financial problems and fears of a consumer slowdown. The small-cap index dropped 15.56 points, or 2.16%, to 704.65. The Dow Jones Industrial Average (INDU) retreated 246.79 points, or 1.92%, to 12,606.30.

On a year-to-date basis, the Russell 2000 has lost 8.01%, while the Dow is off 4.96% and the S&P 500 has shed 4.59%.

The bears were in the driver’s seat today as news of more pain at major financial firms sparked worries that the subprime mortgage mess could take its toll on the American consumer.

Small-cap stocks opened with a drop and never looked up on news that Merrill Lynch & Co., Inc. (NYSE: MER), the world’s largest brokerage house, may incur $15 billion in losses from investments in securities backed by mortgage loans.

Mortgage lenders nationwide frequently packaged loans and sold them as securities to financial companies, and as a result both parties have suffered billions in losses as U.S. home prices started to stagnate in the second half of 2006 and many borrowers defaulted on their loans and went into foreclosure.

Adding to the gloom was New York-based credit card issuer American Express Co. (NYSE: AXP), which announced that it will absorb a fourth-quarter pretax charge of about $440 million due to slower spending by card members and an increase in delinquencies.

The Russell 2000 (NYSE: IWM) is falling on news of worse-than-expected earnings forecasts from major financial players. At 1:26 p.m. ET, the small-cap index had retreated 8.53 points, or 1.18%, to 711.68. The Dow Jones Industrial Average (INDU) was down 207.20 points, or 1.61%, to 12,645.89.

The bears are dominating trading as stocks small and large are losing ground on news that the strain from the problems in the subprime mortgage sector has spread.

Merrill Lynch & Co., Inc. (NYSE: MER), the world’s largest brokerage house, reported before the start of trading that it may incur $15 billion in losses from investments in securities backed by mortgage loans.

That’s more than twice what the New York-based company had initially projected and an indicator that the problems stemming from the stagnation in the U.S. housing market continue to ripple through financial markets.

More bearish news came from luxury jewelry seller Tiffany & Co. (NYSE: TIF), which lowered its guidance for the fiscal year, and credit card issuer American Express Co. (NYSE: AXP), which announced a fourth-quarter pretax charge of about $440 million due to slower spending by card members and an increase in delinquencies.

The American consumer is still spending money, but retail sales have slackened due to high energy costs.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are falling on more news of financial trouble stemming from the subprime meltdown.
 
At 10:33 a.m. ET, the small-cap index had lost 9.64 points, or 1.34%, to 710.57. The Dow Jones Industrial Average (INDU) was off 184.12 points, or 1.43%, to 12,668.97.

Stocks opened in negative territory following news that Merrill Lynch & Co., Inc. (NYSE: MER) may suffer $15 billion in losses from investments in securities backed by mortgage loans.

The loss, which is twice what the New York-based investment bank had initially estimated, is an unpleasant reminder of how shockwaves from the stagnating U.S. housing market continue to ripple through financial markets.

There was more bearish news from the financial sector as credit card issuer American Express Co. (NYSE: AXP), announced that it will absorb a fourth-quarter pretax charge of about $440 million due to slower spending by card members and an increase in delinquencies. The company said that it now expects fourth-quarter earnings below the level a year earlier.

Many mortgage lenders nationwide have taken a hit and even declared bankruptcy as U.S. home prices have stagnated and many borrowers have defaulted on their loans and gone into foreclosure. Lenders frequently packaged loans and sold them as securities to financial companies, which have in turn also incurred billions in losses.

The Russell 2000 (NYSE: IWM) futures are down and the small-cap index will open with a decline on news of more mortgage losses.

Small-cap stocks are set for a bearish opening following news that Merrill Lynch & Co., Inc. (NYSE: MER) may suffer $15 billion in losses from investments in securities backed by mortgage loans. The loss is almost twice what the New York-based investment bank had initially estimated and an unpleasant reminder of how shockwaves from the stagnating U.S. housing market continue to ripple through financial markets.

Providing more unpleasant news is credit card issuer American Express Co. (NYSE: AXP), which announced that it will absorb a fourth-quarter pretax charge of about $440 million due to slower spending by card members and an increase in delinquencies. The company said that it now expects fourth-quarter earnings below the level a year earlier.

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:

• AmCOMP Inc. (AMCP), up 41% on news it will be acquired by Employers Holdings, Inc. (NYSE: EIG).
• Columbia Bancorp (CBBO), up 20%.
• USANA Health Sciences, Inc. (USNA), up 16% on news an informal inquiry by the U.S. Securities and Exchange Commission has ended with no action.

Biggest percentage losers:

• Cadence Pharmaceuticals, Inc. (CADX), down 47% on news a clinical trial did not meet its primary endpoint.
• Opnext, Inc. (OPXT), down 14% on news that it expects fiscal third-quarter sales below Wall Street’s projections.
• Wavecom S.A. (WVCM), down 5%.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are losing ground after the University of Michigan’s Surveys of Consumers hit its lowest level since 1992. December sentiment hit 74.5, below last month’s 76.1. Wall Street economists had predicted December sentiment to hit 75.0.

The Labor Department’s jobs report for November contributed to positive news. For the month of November, non-farm payrolls grew by a better-than-expected 94,000 fueled by growth in the areas of  professional and technical services, health-care and food services, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Economists were projecting jobs to grow by 70,000 from 166,000 jobs created in the month of October. Employment continues to languish in manufacturing and in several housing-related industries, including construction, credit intermediation and real estate.

The unemployment rate held at 4.7% percent, while the average hourly earnings rose by $0.08 over the month, the Labor Department reported as well.

At 10:46 a.m. ET, the small-cap index dropped 3 points, or 0.83%, to 783.95. The Dow dropped 10.48 points, or 0.08%, to 13,609.41.

The Russell 2000 (NYSE: IWM) futures are gaining ground again this morning as investors are cheering the Labor Department’s sanguine jobs report for the month of November.

For the month of November, Nonfarm payrolls grew by a better-than-expected 94,000 fueled by growth in the areas of  professional and technical services, health care and food services, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Economists were projecting jobs to grow by 70,000 from 166,000 jobs created in the month of October.

Employment, however, continued to languish in manufacturing and in several housing-related industries, including construction, credit intermediation and real estate.

The unemployment rate held at 4.7% percent, while the average hourly earnings rose by $0.08 over the month, the Labor Department reported as well.

Separately, investors brushed off downgrades by Merrill Lynch & Co., Inc. (NYSE: MER) to "sell" from "neutral" on American Express Company (NYSE: AXP), Capital One Financial Corp. (NYSE: COF) and Discover Financial Services (NYSE: DFS), noting that “deterioration in consumer credit and spending will continue to undermine the fundamentals of each and lead to share price declines.”

News of strong third-quarter earnings lifted the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) to a second consecutive positive close. The small-cap index added 8.45 points, or 1.04%, to 818.53. The Dow gained 109.26 points, or 0.81%, to 13,676.23.

On a year-to-date basis, the Russell 2000 has increased 3.95%, while the Dow has added 9.63%.

With no major news on the economic front, investors turned to earnings.

The bullish mood was set after the close on Monday when Apple Inc. (Nasdaq: AAPL) reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

More good news came this morning when New York-based card issuer American Express Co. (NYSE: AXP) announced that third-quarter profit rose 10%, while telecommunications giant AT&T Inc. (NYSE: T) said that its third-quarter net income increased 41% due to its acquisition of BellSouth Corp.

Among small-cap companies, jet engine components maker EDAC Technologies Corp. (Nasdaq: EDAC) posted a 500% rise in third-quarter profit. Similarly, newspaper publishing company Journal Communications, Inc. (NYSE: JRN) also saw its third-quarter net income climb.

The Russell 2000 (NYSE: IWM) has trimmed its earlier gains and slipped into the red in midday trading, while the Dow Jones Industrial Average (INDU) is holding on to slim gains. At 1:44 p.m. ET, the small-cap index had shed 0.45 points, or 0.06%, to 809.63. The Dow had risen 43.82 points, or 0.32%, to 13,610.79.

Stocks have lost their momentum this afternoon, which came following news of strong third-quarter earnings.

Apple Inc. (Nasdaq: AAPL) set the bullish tone after the close on Monday when it reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

Also contributing were credit card issuer American Express Co. (NYSE: AXP), which reported before the opening that third-quarter profit rose 10%, and telecommunications giant AT&T Inc. (NYSE: T), which announced that its third-quarter net income increased 41% due to its acquisition of BellSouth Corp.

Futures were pointing north and all indices opened in positive territory. But the enthusiasm from the morning’s earnings reports started to wane around noon, with the bears gaining strength after retailer Target Corp. (NYSE: TGT) lowered its same-store sales forecast for October and Wal-Mart Stores Inc. (NYSE: WMT) said that it now plans less capital expenditures in fiscal 2007 compared with a previous forecast made in June.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are posting solid gains this morning on news of better-than-expected third-quarter earnings.

At 10:33 a.m. ET, the small-cap index rose 3.79 points, or 0.47%, to 813.87. The Dow was up 75.28 points, or 0.55%, to 13,642.25.

The bulls are roaming Wall Street this morning in reaction to upbeat earnings news from major corporate players.

Apple Inc. (Nasdaq: AAPL) got the party started after the close on Monday when it reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

Helping set the positive tone is AT&T Inc. (NYSE: T), the largest U.S. telecommunications company, which announced that its third-quarter net income increased 41%, mostly due to its acquisition of BellSouth Corp.

Also contributing is credit card issuer American Express Co. (NYSE: AXP), which reported this morning that third-quarter profit rose 10% while revenue added 11%.

The Russell 2000 (NYSE: IWM) futures are higher and the small-cap index will open in positive territory on news of good earnings from major players.

Wall Street is in a bullish mood this morning, following news after the close on Monday that Apple Inc. (Nasdaq: AAPL) saw a sharp increase in third-quarter revenue, easily beating analysts’ projections.

Also contributing is credit card issuer American Express Co. (NYSE: AXP), which reported this morning that third-quarter profit rose 10% while revenue added 11%.

Among small-cap companies, Cambridge, Mass.-based Art Technology Group, Inc. (Nasdaq: ARTG) announced quarterly revenue results just a hair above Wall Street’s forecast.

With little on the economic front, earnings news is set to dominate the headlines this morning.

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:

• China GrenTech Corporation Ltd. (GRRF), up 16% on news of a new order.
• Phoenix Technologies Ltd. (PTEC), up 12% on news of a solid fourth quarter.
• China Precision Steel Inc. (CPSL), up 3%.

Biggest percentage losers:

• Ultra Clean Holdings Inc. (UCTT), down 8% on news third-quarter profit missed expectations.
• LSI Industries Inc. (LYTS), down 7%.
• Volterra Semiconductor Corp. (VLTR) down 9% on news of a decline in third-quarter earnings.

Globalization of the world’s economy and the breaking down of national barriers have facilitated freer trade and more open markets, resulting in a vastly more competitive environment for goods and services across virtually every industry.
 
Over the years, there has been a significant increase in movement of one of the primary factors that fuels business: human labor. Today, businesses routinely cross national borders seeking lower operating costs (and more favorable tax rates).
 
As an example, in India, the average entry-level college graduates earn as little as one-tenth of what their U.S. counterparts make. ExlService Holdings, Inc. (Nasdaq: EXLS) employs IT experts, customer service specialists and other professionals in India to provide business process outsourcing (BPO), research and analytics, and advisory services primarily to Global 1000 companies, taking full advantage of this wage disparity. Its customers reap the benefits as well, slashing costs by as much as 50%.

American Express Company (NYSE: AXP), Dell Inc. (Nasdaq: DELL), Norwich Union/AVIVA (LSE: NU), Centrica (LSE: CNA), Fortune 50 banks and others have hired ExlService to handle their back-office operations ranging from customer service, accounting services and Web support to mortgage, loan and insurance processing. Clients in the banking, financial services, and insurance industries (BFSI) in the United States and the United Kingdom account for 75% of ExlService’s revenues.

But ExlService is far from the only firm to capitalize on the offshore outsourcing trend, as American and European companies rush to trim costs amid heightened competition and rising expenses. Direct adversaries include other India-based BPO providers, such as WNS Holdings Ltd. (NYSE: WNS) and FirstSource, with additional competition coming from several IT services firms: Infosys Technologies Ltd. (NYSE: INFY), Electronic Data Systems Corp.'s mPhasis (NYSE: EDS), General Electric Company's Genpact (NYSE: GE), Citigroup Global Services (NYSE: C) and HCL Technologies (BSE: HCLT).  

April 20 (SmallCapInvestor.com) – The major U.S. indices rallied today following news of stronger-than-expected financial results from giants such as Google Inc. (Nasdaq: GOOG).  Among small caps, shares of EpiCept Corporation (Nasdaq: EPCT) soared on news of an effective drug against brain cancer, while a rise in same-store sales lifted Factory Card & Party Outlet Corp. (Nasdaq: FCPO).

The Russell 2000 snapped a three-day losing streak, rising 9.54 points, or 1.16 percent, to 828.86, after setting a record high of 831.44 on Monday.  The Dow Jones Industrial Average added 153.35 points, or 1.20 percent, to 12,961.98, its third consecutive record close.  The Dow has increased 4.7% so far in April.