US SMALL/MIDCAPS-Stocks continue push past broader market

Mon Mar 8, 2010 3:03pm EST

Related Topics

* Small caps, mid caps hit new 17-month highs

* Cell Therapeutics up as regulators approve facility

* S&P MidCap 400 up 0.2 pct, S&P SmallCap 600 up 0.3 pct

By Edward Krudy

NEW YORK, March 08 (Reuters) - Mid-cap and small-cap stocks continued to run ahead of their larger peers on Monday, hitting fresh 17-month highs as investors bet a U.S. recovery would drive profits at smaller companies.

Mid-cap stocks were up for the ninth straight session in their best winning streak since September, while small caps rose for a sixth straight session. Stronger company earnings, signs of a sustained economic recovery, and merger and acquisition activity have all contributed to the recent rise in small- and mid-cap stocks.

Gains were made across a broad array of sectors. Cell Therapeutics Inc (CTIC.O) said U.S. health regulators approved the company to manufacture its experimental cancer drug currently under review. Its shares rose 30.7 percent to $1.18. For more, see [ID:nSGE6270H7]

"I'm not seeing any conspicuous evidence of fatigue," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors in Rochester, New York. "Smaller stocks are historically much more sensitive to economic conditions when compared to large (stocks). If economic conditions are improving, you would expect small stocks to outperform."

The S&P MidCap 400 index .MID rose 0.2 percent while the S&P SmallCap 600 index .SML advanced 0.3 percent. In comparison, the benchmark S&P 500 .SPX gained 0.1 percent.

Healthcare stocks weighed on the broader market after President Barack Obama criticized healthcare insurance premiums as he aims to revitalize his plans to overhaul the sector.

The MidCap 400 is at its highest since late September 2008, while the S&P SmallCap 600 is at its highest since early October 2008. The indexes have gained for 16 of the last 19 sessions.

Among gainers, Helix Energy Solutions Group Inc (HLX.N), an operator of offshore oil and gas facilities, said it is looking to divest its entire oil and gas business. That announcement lifted the shares 6.4 percent to $12.62. [ID:nSGE6270FN]

Data storage technology provider Xyratex Ltd XRTX.O raised its first-quarter outlook, helped by improved demand from all key customers, sending its shares up 15.6 percent to $17.71. [ID:nSGE6270HP]

Semiconductor company Microchip Technology Inc (MCHP.O) raised its offer for flash chip maker Silicon Storage Technology Inc SSTI.O for the second time in a month, topping another offer made by a third party. [ID:nSGE6270JK]

Microchip Technology fell 0.6 percent to $27.11, while Silicon Storage fell 4.3 percent to $3.11.

Also falling was Comverge Inc COMV.O, down 4.7 percent to $10.39 after the energy efficiency company reported a wider-than-expected adjusted quarterly loss as expenses rose, and as it forecast full-year revenue largely below analysts' estimates. [ID:nSGE6270F6] (Reporting by Edward Krudy; Editing by Padraic Cassidy)

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