Stock market chugging along

Since March, the market has been climbing, delivering double-digit growth to most major indices. even as the overall economy has sent mixed messages.  "It's been resilient. There's no question about that," said Vince Russell, director of sales and marketing at Mead Adam & Co in Dayton.

Stock market watchers point to many reasons for this run-up -- including a short war in Iraq and better earnings reports -- and say it signals the overall economy should improve in the next few quarters. Still, doubts persist, though some local companies have seen some positive signs in the past few months.

Robert Premus, professor of economics at Wright State University, cautioned the stock market is just one of the key indicators for future economic growth. He said issues such as consumer spending, business spending and possible trading difficulties with Europe and Canada on the horizon present difficulties for the economy along with the good news.  "We're getting a very mixed picture on this," he said. "I guess only time will tell."

Jack Schannep, editor of the TheDowTheory.com in Tucson, Ariz., said the Dow Jones Industrials index technically became a bull market when it rose 19 percent for the third time on May 12 from its October trough.  As of June 25, the Dow was up about 25 percent, closing at 9,011.53.  The Standard & Poor's 500 has shot up 26 percent since October and 22 percent since a retrenchment in March. Meanwhile, the tech-heavy Nasdaq has put in a performance investors haven't seen in years, climbing 19 percent alone this year and 44 percent since October. "Economic expansions have always followed that kind of (market) move up," Schannep said.

Economic signals

Schannep and others say the rising stock market is a better indication of what's to come than indicators such as unemployment and consumer confidence, which are still lagging.  A few economists hold optimism as well. Economists at Chicago-based Bank One and Columbus-based Huntington Bancshares expect the economy to grow about 3.5 percent in the second half of the year.

However, Premus expects growth of between 2 percent and 3 percent because of the mixed signals from the economy.  Indeed, the latest reports on the Midwest's economic conditions are mixed, according to the Federal Reserve Bank of Cleveland. Manufacturers recently reported production and sales have improved since the last report about two months ago, although they said they still have more unused capacity than they had a year ago.

Tool and die, a key indicator for the manufacturing industry, is showing some signs of life at one local shop.  Stillwater Technologies, which has contracts with automotive, aerospace and industrial manufacturers, has seen its sales shoot up since April, said Bill Lukens, president of the company. After seeing sales rise about 5 percent in the first quarter, the Troy-based company saw sales soar 30 percent in April, May and likely for June as well.  The rise in sales has boosted employment rolls to about 95 from approximately 80 workers in 2002, one the company's worst years in sales, he said.  "We'll be up to 100 in the next few months, assuming, of course, this isn't a blip and it is a trend," he said.

Rick Wegmann, chief executive officer of Beavercreek-based technology firm Business Labs, is another example of that rising optimism that's still tempered by the sluggish economy of the past few years.  "I guess the big question is how fast it will come back. ... You're seeing more opportunities. We're making more calls," he said. "Right now I'm more positive than I probably was in the first quarter."   Wegmann expects sales in the final six months of this year to beat 2002's final two quarters by at least 5 percent.

Market moves

Economic growth will be key to sustaining the market in the future, said David Legeay, director of portfolio management at KeyBank's headquarters in Cleveland. By beating analysts' estimates, companies have soothed investor fears.  "You just have better year-over-year comparisons," he said.  Still, he doesn't see the market growing at more than 7 percent to 9 percent in the next three to five years.

Tax cuts have excited investors as well. Matthew McCormick, principal at Apex Capital Management in Dayton, said the April tax-cut package shows President George W. Bush is working overtime to make sure the economy rebounds.  "He's trying to get the economy going no matter what," he said.  And if market watchers continue to see positive signs, the market will stay on its run, said Harry Williamson, associate vice president of investments at A.G. Edwards in Dayton.  "The stock market does well based on the economy," he said.