US SMALL/MIDCAPS-Stocks advance in broad rally on data

NEW YORK Thu Feb 16, 2012 1:28pm EST

NEW YORK Feb 16 (Reuters) - Small and midcapitalization stocks advanced in a broad rally on Thursday as improved U.S. data boosted optimism about economic growth.

Sectors closely tied to growth, such as materials, energy and financial, were the strongest performers. In addition, all small-cap sectors were up more than 1 percent.

Initial jobless claims unexpectedly fell in the latest week while January housing starts and a gauge of manufacturing in mid-Atlantic states were stronger than expected.

"We clearly have a recovery in place, one that is especially strong in industrial names, and the market is celebrating that," said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

"We like the cyclical parts of the economy, which are starting to accelerate as we get more signs the recovery is sustainable."

Small-cap industrial names climbed 1.4 percent while both the materials and energy groups added more than 2 percent. Among the most active shares, Forest Oil rose 2.3 percent to $14.03 while material maker Myers Industries Inc advanced 9.1 percent.

The strongest midcap group was information technology , up 1.7 percent, led by Itron Inc, which soared 23.5 percent to $49.51 a day after reporting stronger-than-expected results.

The S&P MidCap 400 index climbed 1.3 percent, while the S&P SmallCap 600 index gained 1.5 percent. In comparison, the benchmark S&P 500 rose 0.8 percent.

The smaller-cap indexes have outperformed the larger-cap S&P 500 since the start of the year. The midcap index is up almost 12 percent year-to-date, and the small-cap index is up 10.8 percent, while the S&P 500 is up 7.7 percent in the same period.

On the downside, Strayer Education Inc lost 11 percent to $102.46 after forecasting a weak start to the year as new student sign-ups fell.

Blue Nile Inc sank 11.5 percent to $36.99 after reporting lower-than-expected results and giving a weak forecast, prompting at least two brokerages to cut their price targets on the online retailer.

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