Russell 2000 up with surprise gain

The Russell 2000 (NYSE: IWM) has rebounded from earlier losses and is posting a solid gain. At 1:30 p.m. ET, the small-cap index had added 3.25 points, or 0.47%, to 700.68. The Dow Jones Industrial Average (INDU) was down 18.61 points, or 0.15%, to 12,482.50.

Small-cap stocks have recovered after hitting their lowest point during the first half of trading at about 11 a.m. ET, when the index fell to a level just above 690 points.

The bounce has no apparent explanation, but it’s likely that investors took a second look at JPMorgan Chase & Co. (NYSE: JPM).

The New York-based banking heavyweight reported that fourth-quarter net income declined 21% to $3 billion, or $0.86 per share, compared with $3.9 billion, or $1.09 per share a year earlier. The result is below analysts’ expectations and largely attributed to about $1.3 billion in writedowns due to bets made on securities backed by subprime mortgage loans.

But the third largest U.S. bank also reported that it added $2.3 billion to its credit reserves for the 2007 year and saw its fourth-quarter revenue rise above Wall Street’s projections.

In economic news, the U.S. Labor Department reported before the start of trading that consumer prices rose 0.3% in December. That’s above economists’ projected increase of 0.2%, but below November’s 0.8% jump.

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