NEW YORK, April 9 (Reuters) - Mid- and smallcap stocks dropped over one percent o n Monday after weaker-than-expected payrolls data fueled a pullback in riskier assets which had rallied throughout the year.
Government data on Friday showed employers added 120,000 jobs in March, the smallest increase since October and well short of the 203,000 jobs expected by Wall Street.
Both the S&P MidCap 400 index and SmallCap 600 index had climbed more than 30 percent from their October lows, largely on the strength of improving domestic economic data.
“You are seeing somewhat of a correction which is a bit natural until we start getting data - meaning earnings,” said Edward Hemmelgarn, chief investment officer of Shaker Investments in Cleveland.
“We’ll have to see how that translates, there is not a whole lot you can do until you start getting earnings and companies start talking about how they are doing, so it’s kind of a waiting game here and it’s perfectly natural.”
Selling was broad, with each of the 10 major sectors among both mid- and smallcaps in negative territory. The midcap index was on track for its biggest decline since March 6 and the smallcap index was on track for its worst drop of the year.
The S&P MidCap 400 index lost 1.7 percent. The S&P SmallCap 600 index fell 2.1 percent. In comparison, the benchmark S&P 500 declined 1.3 percent.
Healthcare stocks tumbled, weighed down by a drop in smallcaps Molina Healthcare Inc and Centene Corp , after the companies were not among the five plans selected by the state of Ohio to serve its Medicaid healthcare program for the poor.
Molina shares plunged 24.7 percent to $26.38. Centene slumped 13.2 percent to $44.10. Midcap Amerigroup dropped 5.5 percent to $63.71.
“If it is a sign what you are seeing is just a much more aggressive move on the part of the bigger healthcare firms then that is much tougher for these (smaller) guys because they don’t have the big corporate contracts to fall back on,” said Hemmelgarn.
Midcap AOL Inc was one of the few bright spots, surging 45.8 percent to $26.85 after the company said it would more than 800 patents to Microsoft Corp MSFT.O for just over $1 billion.