Small caps push higher on firm dollar, dip in commodities

Small-cap stocks pushed higher Thursday, with the Russell 2000 (NYSE:IWM) climbing 8.96, or 1.27%, to 717.07. Small caps assumed leadership among equity index products on the rise, fueled by a bounce in the U.S. dollar and a drop in crude oil prices. Financial stocks and insurers provided a significant lift to equities big and small, with Merrill Lynch (NYSE:MER) jumping nearly 8% as the company raised its dividend, and insurance giant Travelers (NYSE:TRV) climbing 5% as the company upgraded its 2008 outlook.

Commodities took a tumble today, which may have eased some of the food and energy fears that have weighed on investor psyche and made headlines in national and international media. Just two days after a USA Today poll said that rising food costs were a major concern for a majority of consumers, news hit around the country of rice being rationed at grocery stores because of shortages. However, the Commodity Research Bureau Index tumbled 1.6% today, which may have provided a lift to stocks, especially since crude oil came off about $3 per barrel from its lofty perch.

Investors also appeared to breathe a sigh of relief about the economic outlook when weekly claims came out at 342,000, much better than the forecast of 375,000. Even though durable goods orders were relatively soft and the New Home Sales report was awful, market focus seemed to settle in on the claims data as a bright enough spot to counter the other economic news. As it stands, the durables data tends to fluctuate quite a bit month-to-month, and everyone already knows that the housing market is floundering. The only data of note Friday morning comes from the Michigan . . .

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