Small caps tread in the green ahead of Fed decision

Small-caps are continuing their upward assent midday, ahead of the Federal Reserve’s decision and after this morning’s GDP number was in positive territory.

At 1:14 p.m. ET, the Russell 2000 (NYSE:IWM) was up 5.01, or 0.70%, at 723.94, while the Dow had gained 117.4, or 0.91%, to 12,949.34.

The Federal Reserve’s Federal Open Market Committee two-day meeting concludes at 2:15 p.m. today in which the Fed is widely expected to trim the fed funds rate by 25 basis points. This would be the central bank’s seventh consecutive cut in the key interest rate since September when the Fed first began battling the credit tempest. Investors will pay close attention to the central bank’s commentary to see if the Fed will pause its monetary policy-loosening campaign to fend off inflation.

Much of today’s trading has been driven by the better-than-expected GDP number and corporate earnings.

This morning it was reported that the U.S. economy grew at a slothful 0.6%, just dodging negative growth — an “official” recession signal. GDP came in slightly better than the 0.5% economists had forecasted. While official definition of a recession definition is two consecutive quarters of negative GDP growth, the United States has experienced two quarters of extremely sluggish growth and the U.S. economy is clearly struggling as consumers grapple with tumbling housing values, rising energy and food costs and a soft labor market.

“Everyone has been finding holes in the positive GDP even before it came out and today's number showed much better consumer spending than what would think,” Andy Busch, global foreign exchange strategist for BMO Capital Markets, said in an email. “However, this data didn't include much of the March numbers. We know . . .

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