Downturn takes toll on local stocks

What a difference a year makes. Last year at this time, the prices of 27 of the 35 stocks of publicly traded companies based in southeastern Wisconsin had posted gains for the year-to-date. This year, only seven of the 35 local stocks gained ground from Jan. 1 through the end of the second quarter on June 30.

The first half of this year marked the weakest six-month run for the BizTimes Stock Index since the local barometer was created in 2003.

The BizTimes Stock Index began this year at 169.76. It closed June 30 at 139.48, down nearly 18 percent and just a whisker above its 52-week low of 138.87.

According to research by Robert W. Baird & Co. Inc., the only local stocks to post gains so far this year were: Bucyrus International Inc. (up 50.88 percent); Joy Global Inc. (up 17.58 percent); Badger Meter Inc. (up 13.30 percent); Snap-on Inc. (up 10.80 percent); Manpower Inc. (up 5.79 percent); Magnetek Inc. (up 2.42 percent; and Metavante Technologies Inc. (up 1.30 percent).

Bucyrus and Joy Global have established Milwaukee as the unofficial mining equipment manufacturing capital of the world. Both companies capitalized on the growing need for raw materials, as emerging economies such as China and India cause higher prices for commodities.

The 10 worst local stocks in the first half of the year featured some familiar names that are staples of the region’s economy and reflect the breadth of the downturn: MGIC Investment Corp. (down 71.99 percent); Ladish Co. (down 50.13 percent); Orion Energy Systems Inc. (down 50.00 percent); Journal Communications Inc. (down 45.23 percent); Briggs & Stratton Corp. (down 43.04 percent); Marshall & Ilsley Corp. (down 40.51 percent); Twin Disc Inc. (down 38.33 percent); Rockwell Automation Inc. (down 34.42 percent); Johnson Outdoors Inc. (down 29.63 percent); and Modine Manufacturing Co. (down 26.85 percent).

The worst performer, MGIC, the nation’s largest private mortgage insurer, was smitten by the subprime mortgage foreclosure crisis.

Orion’s stock has been trading at half the value of its initial public offering. Journal Communications and Modine have launched restructuring plans.

The BizTimes Stock Index remains heavily laden with the stocks of manufacturing companies, as manufacturing continues to comprise a significant share of the local economy.

With that reliance on manufacturing in mind, the economic downturn is showing few signs of easing.

The Federal Reserve Bank’s Chicago Fed Midwest Manufacturing Index (CFMMI) decreased 0.8 percent in May to a seasonally adjusted level of 104.8 (2002=100). Revised data show the index decreased 1.8 percent in April, to 105.7.

The Federal Reserve’s industrial production index for manufacturing (IPMFG) was unchanged in May. Regional output in May was 2.8 percent lower than a year earlier, below the 0.1 decrease in national output.

All four of the regional industry sectors decreased in May: auto sector production fell 1.7 percent; machinery sector output moved down 1.0 percent; resource sector output declined 0.8 percent; and steel sector output edged down 0.1 percent.

The Midwest’s auto sector production fell 1.7 percent in May after dropping 5.2 percent in April.

The Midwest’s automotive output was down 14.8 percent in May relative to its year-ago value, while the nation’s auto output was down 5.8 percent.

The pain in the automotive sector is being acutely felt in Wisconsin, where Delphi Corp. closed its plants in Oak Creek, eliminating 1,000 jobs, and General Motors Corp. recently announced plans to close its production plant in Janesville, eliminating 2,400 jobs.

The broader stock market also reflects a bear market. The Dow Jones Industrials Average ended the first half of the year at 11,350.01, down 14 percent from where it started the year at 13,264.82. It was the worst first half of the year for the Dow since 1970.

The S&P 500 and the Nasdaq Composite Index fell in the first half of the year 12.8 and 13.5 percent, respectively.

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