Russell 2000 holds on to gains

Alex Alexandrov | Feb 20, 2008 3:17pm EST | Comment

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The Russell 2000 (NYSE: IWM) has held on to its gains despite more bad economic news. At 3:15 p.m. ET, the small-cap index had advanced 6.54 points, or 0.93%, to 708.88. The Dow Jones Industrial Average (INDU) was up 93.62 points, or 0.76%, to 12,430.84.

Small-cap stocks are posting a modest rise as a rebound that began halfway through the session is apparently undeterred by news of a bearish economic forecast by the U.S. Federal Reserve.

At 2 p.m. ET, the central bank released the minutes from its regular policy meeting held on Jan. 29 and Jan. 30. The Fed lowered its estimate for economic growth for 2008 and added that it expects a rise in inflation and unemployment.

The jobless rate is projected at between 5.2% and 5.3%, up from the current level of 5%.

Evidence that inflation is rising came before the start of trading, when the U.S. Labor Department reported that the consumer price index added 0.4% in January, above the expected 0.3%. Core consumer prices, which exclude the costs of food and energy, increased 0.3%, above the projected 0.2%.

That news caused stocks to open lower and spend the morning in the red before the current rebound took hold.

The rise is being spearheaded by retailers, such as small-cap Charming Shoppes, Inc. (Nasdaq: CHRS).

Women’s apparel retailer Christopher & Banks Corp. (NYSE: CBK) is also seeing its shares rise. Ditto for Sandpoint, Idaho-based rival Coldwater Creek Inc. (Nasdaq: CWTR).