business

Fifty-fifty.

That's the stock market's message to Minnesota's 100 largest companies so far this year. In a period during which the Dow Jones Industrial Average plowed through the historic 10,000 barrier (before cresting at over 11,000), half of the companies on the Star Tribune's list saw their share prices rise or remain the same while the other half witnessed declines.

Although there are a hundred stories to explain the particulars of each company on the ST100 list, local economists and money managers agree on a few common themes:

  Consumer spending remains strong, helping drive the gains of retailer Best Buy, of Northwest Airlines and of consumer credit companies Metris and Arcadia.

  With the worst of the Asian financial crisis in the past, industrial and cyclical companies such as 3M, Honeywell, Donaldson and Pentair are back in favor.

The gainers list is heavy with industrial firms that make everything from soap (Echolab) to nuts (Fastenal).

  Companies on the high side of the technology curve -- Computer Network Technology, ADC Telecommunications and ValueVision -- are surfing just fine. Investment firm Dain Rauscher, whose Dain Rauscher Wessels unit specializes in technology underwritings, also is benefiting from the Internet boom.

  Low food prices continue to pressure General Mills, Michael Foods and International Multifoods. And financial services, a red hot-sector in the mid-1990s, has definitely cooled (Reliastar, U.S. Bancorp).

Behind these broad trends, there is a simple explanation for some of the biggest gainers -- profits.

Sally Anderson of Kopp Investment Advisors points out that among the top 25 companies on the ST100 list, nine of the 14 gainers reported better-than-anticipated earnings.

Among that group, "ADC and Best Buy not only did better than expected but posted really nice earnings gains [up 30 percent and 72 percent, respectively]," Anderson said. "So clearly a common thread is better-than-expected earnings."

Pointing out that the ST100 listed 50 gainers (including USSB, Life USA Holding Inc. and Fingerhut, all of which saw their shares soar on news that they would be sold) and 50 losers, Minnesota state economist Tom Stinson said: "It looks to me like this once again demonstrates the value of having a diversified economy. We are not riding one sector in an economy that's doing pretty well."

That may well be, said one analyst. But bigger has been better so far in 1999.

"It has been a large-cap market predominantly," said Ed Nicoski, a technical analyst with U.S. Bancorp Piper Jaffray.

"When you look at the 100 [companies listed], 50-50 is not all that inspiring. But among the top 25, the larger caps have done better than smaller caps."

Across the economy, Nicoski said, the poor performers have been in the financial services, consumer staples and health care areas, and the best performers have been in the industrial and technology sectors. And that's pretty much what is happening among Minnesota companies.