July 28, 2010 / 6:45 PM / 9 years ago

US SMALL/MIDCAPS-Stocks fall on weak outlook

NEW YORK, July 28 (Reuters) - Mid- and smallcap stocks slipped on Wednesday after disappointing earnings forecasts in the smallcap technology sector along with weak quarterly results from midcap Global Payments.

Smallcap Websense Inc WBSN.O tumbled more than 12 percent to $18.68 after the Web-security software provider bested quarterly profit expectations, but missed revenue estimates and lowered the range of its 2010 revenue outlook. For details, see [ID:nSGE66Q0LJ]

JP Morgan subsequently cut the stock to “underweight” from “neutral.”

Hutchinson Technology Inc HTCH.O, a supplier of suspension assemblies for disk drives, also lost more than 12 percent, falling to $3.85 after the smallcap posted a smaller-than-expected quarterly loss but forecast a 5 percent to 10 percent decline in fourth quarter shipments. [ID:nWNAB9869]

The S&P SmallCap Technology index .6GSPT shed 2 percent.

“Some of the individual names are having not great earnings but overall there is actually a sentiment out of the data that says the U.S. economy is growing, albeit slowly,” said Michael Hoffman, Director of Research at Wunderlich Securities Inc in Baltimore.

“These companies have to reset expectations and rein in costs associated with a slower consumer electronics marketplace and consumerism.”

Global Payments Inc (GPN.N), which processes online credit card transactions, slumped almost 10 percent to $36.04 after it posted quarterly earnings that missed analysts’ expectations partly on higher costs of services. [ID:nSGE66Q0MV]

The S&P MidCap 400 index .MID lost 1.1 percent while the S&P SmallCap 600 index .SML shed 1.3 percent. In comparison, the benchmark S&P 500 .SPX was off 0.5 percent.

The S&P 400 chart also is closing in on a bearish keypoint, as the 200-day moving average appears poised to break above the 50-day moving average.

The occurrence, when a longer-term average breaks above a shorter-term one, is known among chartists as a “death cross,” indicating possible further downside momentum. (Reporting by Chuck Mikolajczak; Editing by Theodore d’Afflisio)

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