US SMALL/MIDCAPS-Stocks rally after GDP figures
NEW YORK, July 27 |
NEW YORK, July 27 (Reuters) - Mid- and small-cap stocks rallied on Friday following a tepid report on U.S. economic growth that wasn't as bad as had been feared but also left the door open for more stimulus action from the Federal Reserve.
Gross domestic product expanded at a 1.5 percent annual rate in the second quarter, the weakest pace since the third quarter of 2011, although it was stronger than investors' worse fears.
The gains were widespread, with cyclical groups like energy and materials leading the advances. Mid-cap energy shares rose 1.7 percent while small-cap material stocks surged 1.3 percent. Forest Oil rose 2.2 percent to $6.50 while small-cap Century Aluminum added 4.5 percent to $5.86.
While the GDP report showed growth, the number wasn't considered strong enough to significantly change the economic outlook or unemployment rate, suggesting the Fed may still step in with additional measures to boost growth.
"Today's market performance reflects the easing of anxiety that the number wasn't as bad as feared, but it still wasn't gangbusters," said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York. "We would have to see growth over 2 percent to have a discussion about things getting better."
The S&P MidCap 400 index rose 1 percent while the S&P SmallCap 600 index advanced 1 percent. In comparison, the benchmark S&P 500 climbed 0.9 percent.
In company news, Amcol International Corp, another small-cap material stocks, surged 9.6 percent to $31.52 after reporting second-quarter results.
AuthenTec Inc soared 62 percent to $8.27 after Apple Inc agreed to buy the stock for about $356 million.
On the downside, Green Dot Corp, which issues prepaid cards, slumped 60 percent to $9.24 after it cut its full-year outlook.
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