A good day for small caps

The Russell 2000 (NYSE: IWM) and the other major indices posted solid gains today on news that Citigroup Inc. (NYSE: C) received a cash injection of $7.5 billion. The small-cap index added 8.20 points, or 1.12%, to 743.27. The Dow Jones Industrial Average (INDU) rose 215 points, or 1.69%, to 12,958.44.

On a year-to-date basis, the Russell 2000 has shed 5.61%, while the Dow has added 3.88% and the S&P 500 has advanced 0.82%.

The futures were pointing up and stocks climbed out of the gate on news after the close on Monday that the Abu Dhabi Investment Authority has purchased a 4.9% stake in the largest U.S. bank for $7.5 billion.

The cash will help New York-based Citigroup better deal with billions of dollars in losses due to the purchase of securities backed by subprime mortgages. News came out on Monday that Citi, which suffered a loss in the third quarter, may have to slash as many as 45,000 workers from its payroll in an effort to return to profitability.

Today the bank was a bullish force on Wall Street, even though some analysts suggested that Citi may still need to raise more capital.

Stocks were rising steadily until 10 a.m. ET, when the Conference Board reported a larger-than-expected drop in consumer confidence for November.

The business organization said that its index of consumer confidence fell to 87.3 from a downwardly revised level of 95.2 in October. That’s the lowest reading since the aftermath of Hurricane Katrina in October 2005 and a sign that Americans are getting more tightfisted in the face of higher energy costs and declining home prices.

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