Modest rise; financial, airlines counter weak energy

Small-cap stocks edged modestly higher into midday, with support from financial, insurance, airline and homebuilder stocks countered by sinking energy and commodity shares. At 12:27 p.m. ET, the Russell 2000 (NYSE:IWM) was up 1.55, or 0.32%, at 488.14.

Crude oil prices tumbled some 4% so far today, sinking below $38 a barrel at one point for the first time since July 2004. The pullback in crude oil prices has sent a chill throughout the energy arena; oil and gas drillers and oil equipment services firms were among the worst performers today and the Energy Select Sector SPDR Fund was down 2.6%. The U.S. dollar staged a big comeback against the euro today, not only wiping out overnight losses, but rising 0.9%, which took some of the buying edge off commodities as well. The Commodity Research Bureau Index of 19 physical markets was down 1.7% at midday, clearly one of the weakest asset classes in the mix.

One immediate beneficiary of the slide in energy prices should be the airline group, and sure enough airlines were among the best performers today. The AMEX Airline Index was up 3.2%, and small-cap carriers such as US Airways Group Inc. (NYSE:LCC) were up 3.3%, while UAL Corp. (Nasdaq:UAUA) was up 7.7%.

Financial shares were on the mend today, and there were plenty of small banks near the top of the percentage movers list. Insurance companies were clearly on a roll today, with Lincoln National Corp. (NYSE:LNC) up 7.1% at midday, and solid gains seen on other companies as well throughout the group.

Individual small caps on the move today included G III Apparel Group Ltd. (Nasdaq:GIII), which jumped 21%, rising above the 20-day moving average for the first time since the third week of October. Emeritus Corporation (NYSE:ESC) rose 20%, as the senior facilities living operator climbed above $10 for the first time since early November. ESC stock has more than doubled off the late November lows. Chindex International Inc. (Nasdaq:CHDX) rose 19% as the provider of . . .

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