US SMALL/MIDCAPS-S&P 600 hits intraday record, but some cautious

NEW YORK, Sept 11 (Reuters) - The S&P 600 small cap index reached a new intraday record high for a second day this week on Tuesday as hopes of more stimulus from the Federal Reserve later this week boosted riskier assets. But at least one firm is now suggesting using further gains to lock in profits.

The S&P SmallCap 600 index rose as much as 0.7 percent to reach an intraday record high at 475.98 points before ending the day up 0.31 percent at 474.25 points. The index measures companies with an average market cap of $900 million. The biggest company in the index has a market cap of $3.6 billion, according to data from Standard&Poors.

Smaller cap stocks started to outperform larger cap peers in August. That is generally seen as a bullish sign as the sector is typically riskier then large caps. Access to financing is usually poorer and small cap equity markets are less liquid, making for volatility in times of market stress. Conversely, in a booming economy small caps can be more leveraged to growth.

Not everyone, however, is bullish as equities continue their advance. Analysts at Bank of America Merrill Lynch argue that slow growth and automatic tax increases and spending cuts that could go into force next year will limit gains.

"Small caps beat large caps for the month," said the analysts said in a note to clients. "But those fortunate enough to have caught the summer rally should nonetheless use any further upside to take some profits, in our view. Note that this month we trimmed our small cap Growth allocation."

The S&P MidCap 400 index rose 0.1 percent while the S&P SmallCap 600 index added 0.3 percent. In comparison, the benchmark S&P 500 climbed 0.3 percent.

The Federal Reserve could announce new measures to support low interest rates on Thursday when it concludes a two-day policy meeting.

In company news, Legg Mason Inc rose 5.4 percent to $26.85. The money manager said Chief Executive Mark Fetting will resign effective Oct. 1 and named Joseph Sullivan interim CEO, as the firm grapples with customer withdrawals.

United Natural Foods fell 8.6 to $55.23. The organic and specialty food distributor forecast lower-than-expected earnings for fiscal 2013 after inefficient purchasing and logistics management squeezed quarterly margins.

Shares in Casey's General Stores lost 4.2 percent to $57.99. The convenience store operator posted a better-than-expected quarterly profit, helped by higher margins at its prepared foods and grocery businesses.