Russell closes in the green

Small-cap stocks grinded out a higher session Wednesday, overcoming an upward reversal in crude oil and a cavalcade of losses in the financial sector as investors embraced a surprisingly stout durable goods report as a sign that the economic pastures were starting to green up ahead. The Russell 2000 (NYSE:IWM) gained 4.07, or 0.55%, to 738.46.

At first blush, the most dynamic news events today would appear to be a big hurdle for small caps to overcome. An overnight smile over another slide in crude oil prices turned into a midday frown as the market for “black gold” reversed course and charged back above $131 dollars barrel. With pump prices now north of $4 dollars a gallon in many parts of the United States, the lofty energy market threatens to pinch off discretionary consumer funds and crimp any economic recovery.

What’s more, the banking sector took it in the chin today, pulled down by mounting loan losses, capital raising efforts and analyst downgrades on investment banks. Marquee financial stocks under pressure today included American International Group (NYSE:AIG), which tumbled about 4%, KeyCorp (NYSE:KEY), which shed about 11% and Lehman Bros. (NYSE:LEH), which dropped about 1%. Regional banks were plowed under by the credit crunch issue, with Fifth Third Bancorp. (Nasdaq:FITB) off some 3.5% and Comerica Inc. (NYSE:CMA) down more than 4% as well. When looking at a rundown of the big percentage losers today, the list was littered with various banks, large and small alike.

The biggest sector losers accompanying regional banks included multi-line insurance firms, specialized finance stocks, diversified banks and brewers. On the upside, buyers were attracted to fertilizer shares, apparel companies, steel stocks, forest products and casinos.

Among individual small caps, Daktronics Inc. (Nasdaq:DAKT) gapped higher this morning and gained some 14% on unusually brisk volume, spurred on by positive earnings news. Also, Gevity HR (Nasdaq:GVHR) rallied about 12%, with the . . .

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