NEW YORK, July 16 (Reuters) - Small and midcapitalization stocks slipped on Monday, hurt by a downgrade of coal miners and mounting worries that second-quarter results will disappoint.
Shares of Arch Coal were down 3.9 percent at $5.90 while shares of Alpha Natural Resources fell 10.2 percent to $6.85.
BMO Capital Markets downgraded the coal miners to "underperform," citing their high debt levels, deteriorating margins and weak demand for Appalachian coal.
Last week, Patriot Coal Corp became the first U.S. coal producer to seek court protection from its creditors since coal prices began to plummet.
Among other decliners, shares of aerospace and defense components supplier Woodward Inc slipped 4.2 percent to $34.54 after it reported preliminarily third-quarter results below analysts' expectations and cut its full-year earnings forecast on weak sales in the aerospace segment.
Shares of Gardner Denver dropped 8.6 percent to $48.22 after the company said Chief Executive Barry Pennypacker resigned and that Chief Financial Officer Michael Larsen would take over as interim CEO.
For the day, smaller-cap names underperformed large-cap stocks, and that's a trend investors could count on lasting for the time being.
"I don't think we are at the point of turning this risk-aversion trend away just yet," said Shawn Hackett, president at Hackett Financial Advisors in Boynton Beach, Florida.
"Nothing has happened to make anyone more confident."
In yet another sign that the U.S. recovery may be falling behind, data showed a drop in retail sales in June. It was the third consecutive monthly decrease and contrasted with economists' expectations for a small increase.
The S&P MidCap 400 index was down 0.6 percent while the S&P SmallCap 600 index was down 0.5 percent. In comparison, the benchmark S&P 500 was down 0.2 percent.
After the close, advertising distribution company Digital Generation Inc (DG) said it is reviewing strategic options, including a sale of the company, a month after rejecting a takeover bid by rival Extreme Reach Inc.
Shares rose 20 percent to $11.50 in extended trading after closing down 5.7 percent at $9.61 during the regular session.