US SMALL/MIDCAPS-Materials, energy drop on earnings, data

By Chuck Mikolajczak

NEW YORK, Oct 28 (Reuters) - Energy stocks tumbled on Wednesday after a surprising gain in gasoline stockpiles and disappointing earnings from large-cap coal miner Massey Energy.

Weekly government data showed U.S. crude inventories rose less than expected last week as imports rose, while gasoline stockpiles had a surprise gain. [ID:nN28185539]

Massey Energy Co <MEE.N fell 8 percent to $28.81 on Wednesday, a day after reporting a big drop in quarterly profit and lowering expected coal shipments for this year and 2010. [ID:nN28298926]

Midcaps Patriot Coal Corp (PCX.N) and Arch Coal (ACI.N) tumbled 6.6 percent to $11.94 and by 4.5 percent to $22.13 respectively.

Materials shares were also lower, led by Ashland Inc (ASH.N) which makes and supplies specialty chemicals and services to the building and construction markets. That stock fell 10.7 percent to $35.15 despite posting better-than-expected quarterly results. [ID:nN26198148]

Materials stocks were also affected by government data showing a surprising 3.6 percent decline in sales of new U.S. homes. For details, see [ID:nN28295073]

The S&P MidCap Materials index .4GSPM slid 3.7 percent and the S&P SmallCap Materials index .6GSPM fell 2.3 percent.

"The trickle-down on a new home is massive and when you see this big a reduction it just means everything else is slowing down as well," said Dan Cook, senior market analyst at IG Markets in Chicago.

Apollo Group Inc (APOL.O) shed 17.7 percent to $60.10 after it said federal regulators launched an informal inquiry into its revenue recognition practices. At least three brokerages downgraded the company. [ID:nBNG336127]

The S&P MidCap 400 index .MID lost 2.2 percent, while the S&P SmallCap 600 index .SML fell 1.7 percent. The large cap S&P 500 index .SPX declined 1.1 percent.

(Reporting by Chuck Mikolajczak, Editing by Chizu Nomiyama)