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The Russell 2000 (NYSE: IWM) and the other major U.S. indices are rising on news that more rate cuts are possible.

At 11:33 a.m. ET, the small-cap index was up 3.13 points, or 0.44%, to 720.45. The Dow Jones Industrial Average (INDU) had added 42.34 points, or 0.33%, to 12,727.26.

“The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,” U.S. Federal Reserve chairman Ben Bernanke told members of the House Financial Services Committee during his semiannual testimony on monetary policy this morning.

Investors took that as a hint the Fed will lower its target federal funds rate, the rate commercial banks charge each other for overnight loans, when it next meets on March 18.

Bernanke also said that further deterioration of the housing or labor markets poses risks for the economy. A worsening of the credit crunch is also a possibility.

The Russell 2000 moved into positive territory at about 10:30 a.m. ET, with shares of AXT Inc. (Nasdaq: AXTI) being among the best performers.

The Fremont, Calif.-based maker of semiconductor substrates reported fourth-quarter net earnings of $1.87 per share, outpacing analysts’ projections of $1.83 per share.