Small caps slip as oil recovers

Small-cap stocks edged lower in relatively calm trading, as a recovery bounce in crude oil on the stock market opening took some of the air out of the morning bullish side of things. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 4.15, or 0.55%, at 749.22.

Crude oil prices rallied about $1 dollar a barrel back above $115, supported by concerns that the conflict in Georgia could clip supplies that move through the Caspian region. Also, the U.S. dollar was off slightly this morning, which provided some support to oversold commodity markets — including energy. Grains prices were called higher this morning, and several physical markets were in positive territory early today. The Hershey Co. (NYSE:HSY) was down some 8% early today after saying they would raise candy prices 10% to combat higher raw commodities input costs.

Asian equity markets were primarily lower overnight, which was also something of a concern for U.S. stock market traders. China equities continue to slump, apparently not getting any immediate upside bump from the Olympics. China stocks were off 5.4% overnight, while Hong Kong was down 1%, Taiwan down 2.7% and Singapore down 0.7%. One rosy spot was the Pakistan market, which rallied 4.4% on news that President Musharraf had resigned.

Most traders were looking for thin volume this week amid the holiday season in Europe and in the United States, so it might take some kind of surprise to jolt equities out of a sleepy mood.

Broad market sectors on the rise this morning were dominated by commodity themes, with coal, metals, steel, gold, oil exploration, industrial gases, integrated oil and oil drillers all on the upside. On the downside, thrifts and mortgage finance firms were taking a beating following an article in Barron’s over the weekend saying that the Treasury Department would recapitalize the firms using taxpayer funds, which could devalue current investor holdings. Other sectors struggling early included . . .

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