US SMALL/MIDCAPS-Stocks fall; break below 436 eyed on small caps

NEW YORK Mon May 23, 2011 2:51pm EDT

NEW YORK May 23 (Reuters) - Small- and mid-capitalization stocks fell on Monday after worse-than-expected results from companies including Tech Data Corp (TECD.O), with the indexes possibly headed for a period of seasonal weakness.

Shares of Tech Data dropped 11.8 percent to $47.23 after it reported first-quarter results that lagged analysts' expectations as margins contracted. For details, see [ID:nL3E7GN222]

Analysts have called for further weakness in the indexes during the summer, which is typically a tougher period for stocks in general.

"As we move into the seaonally unfavorable period -- sell in May and go away period -- you would likely have small-cap" stocks and other higher-beta categories of the market "come down more than the broader market," said Bruce Zaro, chief technical strategist, Delta Global Asset Management in Boston.

The S&P 600 small-cap index, "right now (is) in the middle of its trading band. It remains to be seen whether further technical downside takes hold."

If it moves below the current trading band of between 436 and 440, the next area of support would be 412 to 416, he said. It was at 438.23 in afternoon trading on Monday.

The S&P MidCap 400 index .MID fell 1.2 percent while the S&P SmallCap 600 index .SML declined 1.1 percent. In comparison, the benchmark S&P 500 .SPX was down 1 percent.

Among other top percentage decliners on the S&P 400 were Vishay Intertechnology (VSH.N), down 5.1 percent at $15.50, and Patriot Coal PCX.N, down 4.7 percent at $21.31.

On the S&P 600, Lawson Products (LAWS.O) was down 6.1 percent at $19.05.

(Reporting by Caroline Valetkevitch, Editing by Chizu Nomiyama

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