Small caps hurdle low confidence reading

Small-cap stocks pushed higher Tuesday, shrugging off record low consumer confidence as investors scavenged for bargains on beaten down bank and financial shares, hoping that President Obama’s pick to lead the Treasury will make quick moves to bolster bank balance sheets and mop up toxic assets. The Russell 2000 (NYSE:IWM) closed higher for the third consecutive session, gaining 5.53, or 1.23%, to 455.58. The Russell is still down 8.8% for the year, while the Dow is off 6.8% and the S&P 500 is down 6.3%.

Timothy Geithner – Obama’s nominee to head the Treasury Department – was finally confirmed by lawmakers late Monday and investors are hoping he will move rapidly to utilize government funds to help out banks. Obama himself even said today that the government will need to step up to help out banks with troubled assets, which was the original purpose of the TARP bailout plan before getting sidetracked during the waning days of the Bush Administration. The prospect of a “bad bank” set up to absorb troubled assets was back in play today, with Senate Banking Committee Chairman Chris Dodd saying the idea made “some sense.”

For the day, bank stocks were up 3.3%, while financial shares gained 3.5%. But the upside progress wasn’t necessarily spread all around as retail stocks, airlines and some commodity groups struggled. The S&P Retail Index dipped 1.3%, with home-related retailers struggling. The AMEX Airline Index tumbled 6.9%, with Delta Air Lines Inc. (NYSE:DAL), the world’s largest carrier, going into a 20% tailspin after releasing crummy earnings.

Gold stocks also took a nosedive today, and commodities in general were struggling, even though the U.S. dollar was pretty much flat against the euro and yen. The Commodity Research Bureau Index fell some 3% on the day, powered by a big decline in crude oil prices. The market for “black gold” tumbled 9%, or $4.15 a barrel, to $41.58, pressured by worries about demand amid the recession and . . .

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