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US SMALL/MIDCAPS-Stocks flat awaiting stimulus signs; M&A helps
August 27, 2012 / 6:00 PM / in 5 years

US SMALL/MIDCAPS-Stocks flat awaiting stimulus signs; M&A helps

NEW YORK, Aug 27 (Reuters) - Mid- and smallcap stocks were little changed on Monday as investors waited for signs from central banks about new measures that could be taken to boost economic growth.

A number of merger and acquisition deals gave market participants a reason to buy, and many analysts expect more deals in the future.

Car rental firm Hertz Global Holdings agreed to buy smaller rival Dollar Thrifty Automotive Group for about $2.3 billion while M&T Bank Corp is buying Hudson City Bancorp Inc for $3.7 billion.

Shares of Hertz climbed 10 percent to $14.50 while Dollar Thrifty gained 7.4 percent to $86.96. M&T gained 4.3 percent to $89.59 and Hudson climbed 15.5 percent to $7.44.

IBM Corp agreed to buy Kenexa Corp for $1.3 billion, sending Kenexa shares up 41 percent to $45.75. IBM, a Dow component, was off 0.8 percent.

“The merger and acquisition theme will only pick up steam as we go through the quarter, which should especially be a catalyst for small and mid-cap stocks,” said Dan Veru, chief investment officer at Palisade Capital Management LLC in Fort Lee, New Jersey, which oversees $3.8 billion and owns shares in Kenexa.

Federal Reserve Chairman Ben Bernanke will speak on Friday at a meeting of central bankers at Jackson Hole, Wyoming. He is likely to keep markets guessing about the timing of another round of bond purchases, but could sustain expectations for action of some kind next month.

In addition, the European Central Bank will meet on Sept. 6, and investors expect some action to support the region’s sputtering economy and tackle the debt crisis.

“There’s not much going on as we look ahead to Jackson Hole, and we might make some new lows in terms of trading volume going into that as investors wait,” Veru said.

The S&P MidCap 400 index was up 0.1 percent while the S&P SmallCap 600 index added 0.07 percent. The S&P 500 rose 0.2 percent.

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