US SMALL/MIDCAPS-Stocks rise, Russell 2000 at 3 1/2 yr high

By Caroline Valetkevitch

NEW YORK, March 30 (Reuters) – Small and midcapitalization
stocks rose on Wednesday, with the Russell 2000 index hitting
its highest since October 2007, bolstering the view that these
groups will keep outperforming the broader market in the near
term.

The Russell 2000 (.RUT: Quote, Profile, Research) advanced 1.3 percent and broke
above 838, hitting its best intraday level since October 2007.
It rose as high as 840.06.

For graphic, see
http://graphics.thomsonreuters.com/gfx/SC_20113003150602.jpg

The Russell and other small-cap indexes have outperformed
the Dow Jones industrial average and Standard & Poor’s 500
index for the past couple of years, said Bruce Zaro, chief
technical strategist at Delta Global Asset Management in
Boston.

“I view it … as a continuation of a trend we’ve seen for
couple of years now. I think we could see more upside and (the
Russell 2000) could reach all way to the 900 level,” he said.

The S&P 500 is up 5.8 percent for the quarter while the S&P
SmallCap 600 index (.SML: Quote, Profile, Research) is up 6.7 percent and the Russell
2000 is up 7 percent.

Gains in the U.S. economic recovery bode well for small and
midcap companies, which tend to do more business in the
domestic economy than internationally, analysts say.

“I would expect that in a growth-oriented environment that
smaller-capitalization companies will do relatively well, if
for no other reason it’s easier to grow a small company than a
large company,” said Mark Schultz, portfolio manager of MTB Mid
Cap Growth Fund at MTB Investment Advisors in Baltimore

The S&P MidCap 400 index (.MID: Quote, Profile, Research) rose 1 percent while the
S&P SmallCap 600 index advanced 1.3 percent. In comparison, the
benchmark S&P 500 gained 0.8 percent.

Some technicians say further gains in the Russell 2000 are
needed to show a convincing break above the recent trading
range.

The day’s move in the index is small overall, said John
Kosar, director of research at Asbury Research in Chicago.

“If we start trading above that 838 level on a consistent
basis and having entire range-of-day trades, that clears the
way for a test of those” June 2007 highs, a break above which
would be more significant, he said.

Among the day’s top gainers on the Russell 2000 were Oxford
Industries (OXM.N: Quote, Profile, Research) up 33.7 percent at $33.44, while shares of
Faro Technology (FARO.O: Quote, Profile, Research) were up 7.8 percent at $40.40.

Among decliners were Flagstone Reinsurance Holdings
(FSR.N: Quote, Profile, Research), which was down 5.3 percent at $9.26 after the company
said it expects to book $80 million to $130 million in losses
from the earthquake and tsunami that struck Japan earlier this
month. For details, see [ID:nSGE72T036]
(Reporting by Caroline Valetkevitch; Editing by Kenneth
Barry)

US SMALL/MIDCAPS-Stocks rise, Russell 2000 at 3 1/2 yr high