NEW YORK, June 6 (Reuters) - Mid- and small-cap stocks rallied for a second straight day on Wednesday with cyclical shares advancing on signs that moves were being taken to rescue troubled banks in Spain.
The situation in Spain, along with the similarly troubled Greece and Italy, has pressured equities in recent weeks on concerns about how the crisis could spread and impact global economic growth.
Germany and European Union officials are urgently exploring ways to rescue Spain’s banks, although Madrid has not yet requested assistance and is resisting political conditions, several EU sources said on Wednesday.
Despite the day’s gains, many were skeptical that the advances would last.
Outside of the hope for additional help, “the macro picture still isn’t looking great,” said Joe Cogan, vice president of International Equities at Topeka Capital Markets in New York. We’re setting ourselves up for a fall if we don’t see follow through.”
Sectors tied to the pace of expansion rallied, with energy leading the way on both the small and mid-cap indexes, followed by materials and industrial shares. The mid-cap energy sector soared 2.9 percent while small-cap shares climbed 3.4 percent. Crude oil gained 2 percent.
Among the most active names in the space, Forest Oil advanced 7.3 percent to $8.48 while Quicksilver Resources added 7.2 percent to $4.17. In the small-cap industrial space, power systems maker Vicor Corp climbed 5 percent to $6.32 and NCI Building rose 4.4 percent to $9.48.
The S&P MidCap 400 index gained 1.7 percent while the S&P SmallCap 600 index climbed 1.6 percent. Both indexes gained about 1 percent for the second day in a row. The benchmark S&P 500 rose 1.6 percent.
On the downside, mattress companies dropped after Tempur-Pedic International Inc slashed its full-year profit view. The stock plunged 46 percent to $23.40 on heavy volume.
Among its peers, Select Comfort dropped 18 percent to $21.15, Mattress Firm Holdings sank 21 percent to $27.87 and Sealy Corp was off 8.2 percent to $1.56.