Small caps rally on earnings

The Russell 2000 (NYSE:IWM) is soaring on news of strong earnings from other major players and despite a steep loss at Citigroup Inc. (NYSE:C). At 12:23 p.m. ET, the small-cap index had jumped 15.78 points, or 2.23%, to 723.78. The Dow Jones Industrial Average was up 261.85 points, or 2.07%, to 12,882.34.

Stocks small and large are posting impressive gains as investors hope that there is relief in sight for the financial sector.

The sentiment is based on Citigroup’s announcement before the opening that its first-quarter net loss was a ghastly $5.1 billion, or $1.02 per share, worse than the $0.95 per share expected by analysts.

However, investors were expecting worse and actually took the numbers as a bullish sign, particularly as revenues came in above expectations and write-downs from the credit crunch were not as bad as some feared.

With the financial sector posting gains, small caps are no exception. Shares of World Acceptance Corp. (Nasdaq:WRLD), which is in the small-loan consumer . . .

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