NEW YORK, March 1 (Reuters) - Mid- and small-cap stocks rose on Thursday, led by consumer shares after retailers reported strong sales and data continued to point to an improving job market.
Shares of a handful of midcap retailers including Guess and Fossil rose more than 3 percent as mild weather spurred the purchase of spring clothing in February, leading to broad sales gains at top U.S. chains.
First-time claims for jobless benefits fell slightly in the latest week to 351,000, keeping the gauge near four-year lows, the Labor Department reported. Still, the upbeat view on the economy was crimped as the U.S. manufacturing sector unexpectedly slowed in February, according to the Institute for Supply Management.
The ISM figure notwithstanding, the brighter economic numbers in the past weeks are supporting equities, said Scott Billeaudeau, portfolio manager at Fifth Third Asset Management in Minneapolis, noting that retailers' stronger performance could be tied to the improving labor market picture.
"You get some people who weren't sure they were going to keep their job spending a little more now," Billeaudeau said.
The S&P MidCap 400 index rose 0.8 percent while the S&P SmallCap 600 index added 0.6 percent. In comparison, the benchmark S&P 500 gained 0.6 percent.
Among the best performers in consumer stocks, Fossil gained 3.5 percent to $126.29, Guess was up 3.1 percent at $35.74 and Deckers Outdoor added 5.2 percent to $78.61.
Shares of Liz Claiborne jumped 13.5 percent to $11.10, their highest close since October 2008, after Wedbush Securities started coverage with an "outperform" rating, saying the retailer's decision to change its business model is going to pay off.
Car retailer Lithia Motors rose 4.3 percent to $24.64 and peer Sonic Automotive added 3 percent to $17.65 after Ford Motor and General Motors posted strong sales despite rising gas prices.
On the downside, shares of auction house Sotheby's fell 9.1 percent to $35.75 after it posted a weaker-than-expected quarterly profit. (Reporting by Rodrigo Campos; Editing by Leslie Adler)