NEW YORK, Sept 8 (Reuters) - Small- and mid-cap stocks were modestly lower on Thursday a day after a strong rally and as caution prevailed ahead of a speech by U.S. President Barack Obama laying out a major jobs initiative.
Obama is expected to detail a $300 billion package that includes tax cuts and new spending to repair deteriorating infrastructure. While some of the emerging details have been met with encouragement by traders, many believe the plan won’t be effective in combating the country’s massive unemployment problem. For details, see [nN1E7870HE]
Equities have been volatile recently, surging more than 3 percent on Wednesday following three days of declines. Small- and mid-cap stocks rose in early Thursday trading, with tech among the biggest gainers, but later pulled back.
“There’s quite a bit of uncertainty ahead of the speech, so there’s a reluctance to take big positions,” said Phil Flynn, senior market analyst with PFG Best in Chicago. “We rallied earlier on but now we’re backing off that as people take profits.”
Financial stocks were among the biggest mid-cap losers, with Synovus Financial (SNV.N) down 2.8 percent to $1.41 and Jefferies Group JEF.N off 2.6 percent to $14.93.
Tech shares reversed early gains to turn negative, leaving the utility sector the biggest gainer on both the small .6GSPU and mid-cap .4GSPU indexes, rising 0.7 percent on each. The group is considered a defensive play. Health care stocks, another typically favored group on down days, were also modestly higher.
The S&P MidCap 400 index .MID slid 0.2 percent while the S&P SmallCap 600 index .SML fell 0.3 percent. In comparison, the benchmark S&P 500 .SPX was flat.
Among individual names, Digital River DRIV.O climbed 6.9 percent to $20.30 a day after authorizing a $100 million stock buyback program.
In merger news, Penn Millers Holding Corp PMIC.O surged 23.5 percent to $20.13 after ACE Ltd ACE.N agreed to buy the company for $107 million. [ID:nL3E7K80LE] (Editing by Leslie Adler)