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Small-cap stocks edged higher Thursday, shrugging off steep morning declines tied to the credit crisis as gains in commodity, manufacturing, transportation and tech stocks shifted focus away from the perilous financial landscape. In the end, the Russell 2000 (NYSE:IWM) closed up 1.83, or 0.26%, at 719.00; meanwhile, the Dow was up 1.46% and the S&P 500 was up 1.38%. For the year, small caps are still holding up much better than their big-cap brethren, with the Russell down 6.1%, the Dow off 13.8% and the S&P 500 down 14.9%.

At one point early this morning, the Russell was down more than 2% and appeared on the verge of a calamitous downside breach of key “figure” support along the 700 line. However, buyers came back into the market, braving not just fears about fragility in the financial arena, but also looking past a fresh batch of worrisome economic data as well. Tech stocks were clearly the early bedrock of the bulls, with the Nasdaq 100 never showing the kind of morning worries that seized other index products.

A key part of the mid-morning climb off those scary opening lows was yet another intriguing rally in commodity stocks, a rally that lately has defied price action in the physical market. However, as the day progressed, leadership on the buy-side shifted into the manufacturing, transportation and internet side of things. For the day, crude oil prices tumbled $1.71 a barrel to $100.87, while dipping to the lowest intraday point since April. In an interesting side note, the Commodity Futures Trading Commission today said that they could not say that speculators were to blame for the surge in oil prices this summer.

The sell-off in commodity markets was fairly broad in scope, pressured by a rise in the U.S. dollar, which made new multi-month highs against the euro, and 2 ½-year highs against the U.K.’s pound sterling. Normally, it would be convenient to highlight currency strength as a sign of international interest in U.S. assets, but the story appears to be primarily one of concern about global growth — particularly out . . .

Small-cap stocks pushed higher Tuesday, bolstered by a sharp pullback in crude oil prices that allowed a little breathing room toward inflation fears and the consumer spending picture. In addition, Federal Reserve Chairman Ben Bernanke said that the central bank could extend the emergency lending window to strapped financial institutions, which took a little heat off the credit crunch — at least momentarily. The Russell 2000 (NYSE:IWM), gained 24.46, or 3.72%, to 682.72, generating the largest one-day gain since March 18 and the third largest one-day percentage rally of the year.

Small-cap stocks were noticeably stronger than their large-cap brethren, which were dragged down by significant losses on key oil stocks such as Exxon Mobil (NYSE:XOM), which was down 0.7% heading toward the close, Chevron (NYSE:CVX), off 1% and oil services stock Schlumberger Ltd. (NYSE:SLB), which shed 3.7%.

Before the stock market open earlier today, Bernanke’s comments erased solid overnight losses in stock index futures, and helped alleviate mounting worldwide concern about the health of the banking system. Before the Bernanke rescue, European shares were sinking, paced by a slide to five-year lows in bank stocks, and elsewhere around the world global stock index products slipped into bear market territory.

Even though the tone improved with today’s recovery in equities, the market is still clearly in a tenuous position fretting about high energy costs amid sluggish . . .

The Russell 2000 (IWM) jumped earlier and higher than the other major U.S. indices as upbeat financial news sparked a rally. The small-cap index soared 17.81 points, or 2.56%, to 713.30. The Dow Jones Industrial Average (INDU) added 207.53 points, or 1.67%, to 12,650.36.

On a year-to-date basis, the Russell 2000 has declined 6.88%, while the Dow has let go 4.63% and the S&P 500 has retreated 6.12%.

Wall Street made a remarkable turn around today and posted strong gains following news midway through the session on news that bond issuer MBIA Inc. (NYSE: MBIA) will retain its top rating despite posting a record quarterly loss.

News reports quote MBIA’s CEO Gary Dunton as saying he is confident his company will maintain its AAA rating as it takes measures to raise capital.

That calmed investors and allowed the bulls to take center stage.

According to other news reports this afternoon, major rating agencies will hold off on downgrading the Armonk, N.Y.-based company, which primarily guarantees municipal bonds.

A downgrade will make it difficult for MBIA to find clients and will lower the value of many of the bonds that it insures. In turn, that will lead to a wave of write-offs at banks and other financial institutions and make it more difficult for the issuers of municipal bonds to raise capital.