Russell closes in the red

Selling enthusiasm swamped small-cap shares when the afternoon release of FOMC minutes suggested a lower growth forecast, inflation jitters and an April rate cut that was a close call. The Russell 2000 (NYSE:IWM) lost 8.54, or 1.16%, to 727.11. It was the fourth consecutive session in which small caps closed below the opening, something that hasn’t happened since January.

Small caps spent much of the day trying to hold onto tepid gains in the face of red ink in large-cap index products and yet another spike in crude oil prices. However, the selling dam burst after the release of the FOMC minutes. In addition to suggesting that the economy was on a slower recovery path, the Federal Reserve’s policy-making board basically did everything but say outright that rate cuts were on hold right now because of inflation issues.

It wasn’t hard to look for signs of fresh price inflation today. Within the energy arena, crude oil prices jumped to more than $133 dollars a barrel when a weekly inventory report showed a surprising dip in crude oil stockpiles versus expectations for an increase in supplies. With pump prices starting to move north of $4 dollars a gallon in some metropolitan areas, consumer’s discretionary spending money is getting even more pinched, which could stall any burgeoning economic recovery.

The sting of higher crude oil prices wasn’t just felt in consumer pocketbooks today. Airline stocks were shot down in stunning fashion, with the Amex Airline Index sinking more than 12% to fresh 52-week lows. At this time last summer, the Airline Index was trading in the $50 range … today, the price is below $19. Among airline stocks, small-capper US Airways Group (NYSE:LCC) fell 17% to new 52-week lows . . .

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