Oil’s drop causes spike in small caps

Small caps spiked out of the gate and remained at lofty levels as oil slumped and the dollar climbed, taking the limelight off Fannie Mae’s staggering loss and lower-than-expected productivity gains.

At 12:47 p.m. ET, the Russell 2000 (NYSE:IWM) soared 16.35, or 2.29% at 729.76, while the Dow crusaded 235.55, or 2.06%, to 11,666.98.

Oil has pulled back on the session as the dollar continues to stage a rally initially triggered by the ECB’s dovish comments Thursday. Talk that a damaged pipeline in Turkey could be fixed sooner than anticipated also pushed down crude. A barrel of crude oil slumped $3.58 to roughly $116 at midday. Oil has dropped as low as $115 during the session.

Today’s slide in crude is welcome as oil’s rise has zapped so much of consumers’ spending power, which accounts for two-thirds of the economy.

The greenback continues to make major strides against the euro and the yen. The dollar was roughly $1.50 versus the euro, marking major appreciation from the greenback’s close of $1.53 Thursday.

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