Small caps gaining speed

The Russell 2000 (NYSE:IWM) is rallying, having gained more than the other major U.S. indices. At 1:58 p.m. ET, the small-cap index had added 8.81 points, or 1.29%, to 691.99. The Dow Jones Industrial Average was up 85.81 points, or 0.70%, to 12,302.21.

Stocks small and large are rising as investors are apparently reacting to the Bush administration’s plan to overhaul financial regulation to prevent future crises like the ongoing subprime mortgage mess.

The proposal, outlined by U.S. Treasury Secretary Henry Paulson after the opening, would broaden the powers of the U.S. Federal Reserve and allow it to oversee financial services beyond banks. Additionally, oversight of U.S. securities and futures markets will be centralized under a single regulatory body.

The plans will take years to implement, Paulson said.

Shares of companies offering printing services are currently the best-performing industry group. Among the winners is Champion Industries, Inc. (Nasdaq:CHMP). Shares of the Huntington, W.Va.-based commercial printer and supplier of office products are up 1%.

Similarly, brand image solutions company Schawk Inc. (NYSE:SGK) is also seeing its stock price rise.

Switching gears, shares of Seattle, Wash.-based Zymogenetics Inc. (Nasdaq:ZGEN), which makes therapeutic proteins, are sagging.

“We believe ZGEN could trade down to around $5 to $6 on a soft launch . . .

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