Small caps up on crude dip

Small-cap stocks pushed higher Wednesday, underpinned by a slide in crude oil prices and a stabilization in the latest bout of credit crunch fears. The Russell 2000 (NYSE:IWM) closed up 4.71, or 0.64%, at 743.71, outperforming both the Dow and S&P 500, both of which struggled to close near steady levels.

Once again the small-cap market retreated after moving close to key long-term resistance at 750. That point marks a 50% Fibonacci retracement of the entire bear market collapse and has been a difficult spot for bulls to crack on the rally off the March lows. Looking at short-term charts for Thursday, resistance is at 745, 750 and 754, while support comes in at 735, 731 and 726.

Crude oil prices slumped more than $1 dollar per barrel Wednesday, dipping back below $124 as the weekly stocks report showed a build in gasoline inventories. In addition, the demand picture might be softening a bit as India and Malaysia decided to raise fuel prices, which could curb demand out of Asia. Airline stocks have had a mild sigh of relief this week on the pullback in energy prices, and the AMEX Airline Index climbed 3.31% Thursday. Small-cap stock US Airways (NYSE:LCC) gained about 3.6%, while UAL Corp. (Nasdaq:UAUA) rallied about 5% as the major airline announced plans to reduce workforce and fleet numbers.

The market continues to closely watch developments on the financial front as talk has expanded again this week about debt write downs, and the need for some banks and brokerage firms to raise capital to shore up balance sheets. Much of the focus the last two sessions has centered on Lehman Bros. (NYSE:LEH), and the firm’s stock has been on a rollercoaster. Today, Lehman Bros. managed to rise about 2.5% to near 31.40, rallying back from intraday lows at 28.52.

Investors had a chance to trade off several different economic reports this morning. Overall, the data was a mixed bag and appeared to have little more than a short-term impact on trading decisions. To recap, the ADP private employment survey showed an unexpected increase in new jobs in May, which was a supportive element

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