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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 . . .

The Russell 2000 (NYSE:IWM) closed down nearly 8% today, sinking to the lowest point since May 2003. Some of today’s small-cap gainers are Orexigen Therapeutics (Nasdaq:OREX), Retalix Limited (Nasdaq:RTLX) and Targanta Therapeutics (Nasdaq:TARG).

Other Market Watch highlights today included:

• The consumer price index headline figure came in at minus 1%, which was slightly below the consensus forecast for a dip of 0.8%.
• The MBA Mortgage Application Index slipped 6.2% and is hovering near 8-year lows as the housing market continues to struggle. 
• Single-family housing starts tumbled to the lowest level in 27 years.
• Automobile manufacturers, REITS, health-care facilities and hot commodities like aluminum and coal were all down. 
• The yield on benchmark 10-year notes collapsed some 4.5% today and the yield on five-year notes hit a five-year low.
• The chart picture for small caps is decidedly one-dimensional, with all the power and the dynamic long-term patterns pointing to further decay.

Small Cap Gainers:

• Orexigen Therapeutics Inc. (Nasdaq:OREX) closed up 20% without any apparent fresh news behind the move.
• Retalix Limited (Nasdaq:RTLX) closed up 20.5% on light volume this morning, following earnings results earlier this week that showed a decline in Q3 profit, prompting small cap to cut guidance.
• Targanta Therapeutics Corp. (Nasdaq:TARG) was a featured small-cap in rally mode Monday and the move was extended today –- the company closed . . .

Small-cap stocks fell hard Wednesday, with the Russell 2000 (NYSE:IWM) tumbling to fresh bear market lows while sinking to the lowest point since May 2003. Financials and commodities were hammered by investors, but there really were very few safe ports in today’s stock market storm. In fact, the desire for some kind of safe place to park cash played a role in the stock market’s descent as investors pulled money out of equities and put it in low-yielding credit instruments. The Russell lost 35.13, or 7.85%, to 412.38 and is now down 46% for 2008. Meanwhile, the Dow was off 5.07% for the day and is down 40% for the year and the S&P 500 was down 6.12% Wednesday and off 45% for 2008. Both the Dow and S&P 500 also made new closing lows for the move; the intraday low for the Dow from Oct. 10 is still intact, however.

There was some sense that the difficulty in crafting a rescue package for domestic automakers was hampering market psychology. It certainly didn’t do any good for General Motors Corp. (NYSE:GM) stock, which was off nearly 12%. Meanwhile, Ford Motor Co. (NYSE:F) was down 25%, trading well below $2 a share. While auto executives grovel for a handout from tongue-lashing lawmakers, the political hot potato bounces about without much progress, leading Senate Banking Committee chair Christopher Dodd to say that the chances for a bailout bill for automakers was “remote.”

In a fitting end to another bruising day in the stock market, the only broad S&P sector with a noteworthy gain was brewery companies. On the downside, automobile manufacturers were smashed, REITS were evicted from portfolios, health care facilities were anemic and former hot commodities like aluminum and coal were running cold.

Elsewhere on the commodities scene, crude oil prices actually edged higher, breaking free of the lock-step equities trade that had been in place of late as the onset of colder weather boosted physical energy prices. Still, it didn’t do much to heat up energy stocks, as the Energy Select Sector SPDR Fund slipped 5.4%. Even the cattle market was slaughtered today, with futures for December delivery collapsing 3.3% to new contract lows, while prices on some continuous charts were at . . .