Russell closes in the green as crude oil rejects morning peak

Small-cap stocks pushed higher Thursday, snapping a string of four consecutive losing days as investors found relief from an intraday reversal in crude oil prices. The Russell 2000 (NYSE:IWM) closed up 5.90, or 0.81%, at 733.01.

“Today was all about reacting to crude oil. In fact, [Wednesday] was about crude oil and Friday is going to be about crude oil. When prices get this extreme at the gas pump, it really makes you wonder if we’re approaching the breaking point for the consumer. If they don’t have discretionary money to spend on things other than gas, then it’s going to have a negative rollover effect on everything else,” said Dominic Boyle, market strategist with Lind-Waldock, in a phone interview.

In order for equity markets to sustain the rally off the March lows, Boyle said, “we will have to get confirmation from crude” in the form of a top, or at least a dramatic slowdown in the escalation of energy prices. After a new record high overnight at $135 dollars a barrel, crude oil futures slipped back to about $131 during the U.S. trading session and left a little potential topping pattern by making new highs and closing lower.

As crude oil tilted off the highs today, the greenback chewed up some recent lost ground, rising about 0.6% against the euro and 1.2% versus the yen. In general, a strong dollar of late has been seen as a positive signal for equities, associated with investment flow into U.S. stocks, and potential unwinding of short dollar/long commodity trades.

In addition, some of today’s upbeat psychology may have been stoked by news of a big acquisition, with NRG Energy Inc. (NYSE:NRG) tendering a bid to purchase Calpine Corp. (NYSE:CPN) for a stock deal worth about $11 billion. If there are . . .

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