After six months of record closes, the market found itself on a high note despite a last-minute spell of mostly downward travel and lackluster trading volumes.
At the end of our first-half trading sessions, the Federal Open Market Committee announced its decision to hike interest rates a quarter point. The widely expected move surprised no one, but what did spark a flurry of upward activity was the relaxation of the Fed’s bias to “neutral.” Wall Street had feared a series of interest rate raises to cool down the specter of inflation.
“The removal of the bias toward restraint hints that they may not be ready to raise rates another quarter of a percent,” said Hugh Johnson, chief investment officer at First Albany. Through the year’s first six months the Dow Jones Industrial Average gained a whopping 1789.37 points, or 19.5%, to 10970.8. The rally pushed the TWICE Stock Index further into positive terrain, and it closed at 6314.4 points, an impressive 27.5% gain. Advancing issues in the Index shot ahead of decliners issues 61 to 28.
How well did some of the TWICE stocks perform through the first half? While they weren’t the TWICE Index growth leaders, both Best Buy and Tandy placed in the top-10 of the best performing stocks in the S&P 500. Tandy ranked third with a 147% share price gain to $48.88, and Best Buy placed fifth with its 120% jump to $67.50.
On the retailing front, Denver’s Ultimate Electronics provided the biggest TWICE Index payoff to patient investors, as its stock price tripled in the January 1-June 30 period, closing at $18.19. Also joining Best Buy and Tandy in the “double or better” club was Rex Stores, up 121% to $29.81. Among specialty retailers showing double-digit stock value growth were CellStar, Circuit City, Good Guys, Harvey Electronics and Tweeter.
Among manufacturers the biggest first-half stock payoff was the five-fold jump for UniView to $2.25 per share, and EchoStar followed with a better than tripled climb to $153.44 and Cidco enjoyed a 158% lift to $7.41. Audiovox showed the value of a performance turn-around with an 85% share value rise to $11, while O’Sullivan’s shares tracked a buyout offer with a 61% rise to $17.
The manufacturing sector also had a long roster of companies with smaller, but still significant value gains of 30% or better, including Bush, Carver, Hitachi, Lexmark, Motorola, NEC, Nokia, Philips, Sanyo, Sony and Whirlpool.
Among retail/distributor underperformers were Bright Point (down 56%), Electronic Boutique (down 30%), Ingram Micro (down 27%), Sharper Image (down 28%) and Value America (down 58%).
Among manufacturers with lackluster share price results: Boston Acoustics (down 33%), Cobra (down 15), Compaq (down 44%), Emerson and Faroudja (each off 10%), Plantronics (down 24%), Rayovac (off 15%), Recoton (down 49%) and Vidikron (down 22%).
The TWICE Stock Index and first-half report was compiled by Nordby International