Stimulus can't lift small caps

The Russell 2000 (NYSE: IWM) closed with a tiny drop while the other major U.S. indices rose on upbeat economic news and good earnings. The small-cap index lost 0.71 points, or 0.10%, to 692.72. The Dow Jones Industrial Average (INDU) added 108.44 points, or 0.88%, to 12,378.61.

On a year-to-date basis, the Russell 2000 has shed 9.57%, while the Dow has let go 6.68% and the S&P 500 is missing 7.92%.

American households and businesses will get $150 billion in tax rebates and cuts this summer as part of a stimulus package intended to prevent a recession. Details of the deal were officially announced this afternoon.

“This package has the right set of policies and is the right size,” President Bush said this afternoon. “The incentives in this package will lead to higher consumer spending and increased business investment this year.”

The Democratic leadership in Congress and the White House agreed to give most tax filers rebates of up to $600 per person and $1,200 for couples. Workers who don’t make enough to pay taxes will receive checks of $300 per person.

The rebates will total about $100 billion and will be mailed out starting in May. The package also includes approximately $50 billion in business tax cuts that will allow businesses to write of 50% of certain capital equipment purchases.

It is not yet clearly when Congress will vote on the package, but House Speaker Nancy Pelosi has said that action will be taken soon.

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