Mass. stocks struggle so far
The stock market closed the books on the first half of the year yesterday and the news from Massachusetts wasn't pretty.
Let's get the headline out of the way first: Roughly one in four Massachusetts stocks has lost at least a third of its value so far this year. True, there are a lot of little companies you probably wouldn't recognize among them. But that's still a lot of losers in a relatively short time.
The Bloomberg Massachusetts index tracking 236 stocks lost 14.4 percent over the first six months of 2008. Measured from the most recent market peak at the end of last October, the index has lost 20.3 percent of its value. A bear market is defined by a 20 percent decline.
In those broad strokes, the performance of Massachusetts stocks looks a lot like the returns of the major stock market indexes, such as the Standard & Poor's 500. But there are two exceptions: We don't have many of the big energy companies that have boomed in the stock market, and we also don't have any of the financial service giants whose stocks have fallen off a cliff this year. Call it a wash.
"The market is very sector-based, continuing a theme from last fall," says Greg Locraft, a portfolio manager at MFS Investment Management in Boston. "There's a flight to quality. If you're attached to anything that's inflating, like energy, food, or even utilities, you're having a pretty good year. If you're attached to things that are deflating in value, like homes or consumer checkbooks, you're having a really tough go of it."
It's easy to see those broad themes at work, driving flocks of stocks in some industries much higher and clobbering the shares of companies working in others. But look deeper down into the market and you'll see all kind of contradictions and exceptions. You don't have to look far beyond our backyard.
Exhibit A: Alternative energy stocks, generally very popular on Wall Street at the moment. American Superconductor Corp. of Westborough, which is increasingly involved in the wind power business, has seen its stock climb 31 percent so far this year.
But shares of Evergreen Solar Inc. of Marlborough, the state's biggest solar power company, have sunk nearly 44 percent in 2008. It's the worst first-half performer among all Massachusetts companies valued at more than $1 billion by the stock market.
In the retail business, 2008 has been a year to forget so far. But many of the state's most prominent retailers are doing well, or at least not losing ground. Some, such as Staples Inc. of Framingham (up 3 percent) are considered superior competitors that can grab market share away from weaker companies in a bad economy.
Retailers who appeal to shoppers in penny-pinching times are also doing better than the pack. TJX Cos. of Framingham (up 9.5 percent) and BJ's Wholesale Club of Natick (up 14.4 percent) have benefited.
Life sciences turned out to be the ultimate wild-card industry among Massachusetts stocks in the first half, contributing more than its share of the biggest winners and losers. It accounted for five of the very best stock performers and four from the bottom of the barrel.
Identix Pharmaceuticals Inc. of Cambridge, which is working on a new drug to treat HIV, was the state's best-performing stock with a first-half gain of 169 percent. Neurometrix Inc., a medical device company in Waltham, finished dead last by losing 84 percent of its value.
Pull together a list of the state's 10 largest companies by stock market value and the numbers look pretty good. Four of the stocks were worth more yesterday than they were at the start of the year, and all but two have performed better than the overall market.
But the two biggest are also the two worst performers among the top 10, and by a large margin. Computer storage giant EMC Corp. of Hopkinton saw its shares sink 20.7 percent. State Street Corp. stock sank 21.2 percent.
What do all those numbers prove? Stock market investors are running to safer stocks but will still buy companies with legitimate growth stories. But particularly now, they'll run for the hills at the first sign of trouble.
The Red Herring
It also reminded them Sonus shares were trading near five-year lows. As if they didn't know.
It cited an improved financial picture and "significant progress" toward establishing sound financial and administrative management practices.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com. 