Small caps rise with homebuilder, drug, energy gains

Small-cap stocks pushed higher Tuesday, shaking off losses in the banking and financial sector amid gains for homebuilders, drug and energy shares. The Russell 2000 (NYSE:IWM) closed up 3.28, or 0.73%, at 452.90, but lagged gains in the Dow and S&P 500, which takes some of the edge off the advance. For the year, the Russell is down 9.3%, while the Dow is off 7.9% and the S&P 500 is down 7.1%.

The market started off on a defensive note and continued to chop around on both sides of positive ground until the bulls gained traction in the afternoon. About 30 minutes into the session an upbeat reading on pending home sales and an announcement by the Federal Reserve that they would extend various credit windows helped underpin the market.

For the record, pending home sales came in plus 6.3%, well above the forecast for a flat reading. The upside release helped spark a rise in homebuilder stocks with the ISE Homebuilders Index climbing 8.3%. Several key companies in the homebuilder universe fall within small-cap guidelines, including Meritage Homes Corp. (NYSE:MTH), which jumped 17% on the day. Small-cap builders KB Home (NYSE:KBH) rose 10%, while Centex Corp. (NYSE:CTX) was up 10%.

The other piece of economic data in play today came from various sales reports out of automobile companies. As expected, vehicle sales fell off a cliff again in January, with General Motors Corp. (NYSE:GM) collapsing 49%, Ford Motor Co. (NYSE:F) down some 40%, while Toyota Motor Corp. (now the world’s largest automaker) saw a sales drop of 34% and Nissan tumbled 30%. Despite the sober news on sales, Ford shares actually finished higher on the day (up about 4%), while General Motors was down 3%.

Energy shares outpaced the overall market rise today, helped along by a modest 1.7% advance in crude oil futures, which gained $0.70 a barrel to $40.78. Crude prices were underpinned by talk of additional production cuts out of OPEC and some . . .

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