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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Stocks Weather Stormy First Quarter

CHICAGO, Mar 28, 2002 – Chicago-based Morningstar, Inc., a global investment research firm, today released its first-quarter stock summary in its special Quarter In Review section, which can be found at http://www.morningstar.com, the firm's investment Web site.

"After a rocky 2001, the stock market remained jittery in the first quarter," said Pat Dorsey, director of stock analysis for Morningstar. "Accounting issues made investors scrutinize the financial statements of all public companies, and bankruptcies such as Kmart and Global Crossing grabbed headlines. Yet there are also some signs of an economic rebound."

First Quarter 2002 Stock Performance Highlights
(data through Wednesday, March 27):

  • The Dow Jones Industrial Average rose 4 percent, the Nasdaq Composite index fell 6 percent, and the S&P 500 index remained flat.    
  • The energy stock sector performed the best, returning more than 11 percent for the quarter. Consumer durable stocks, such as automakers and major appliances, were a close second, posting 11 percent stock price gains.     
  • Technology remained the worst-performing sector, declining 10 percent for the quarter.    
  • Gambling and hotel casino stocks were the surprise winners for the quarter, gaining more than 38 percent.    
  • Communications-equipment stocks were the worst-performing industry, declining more than 40 percent.     
  • The three best-performing stocks with median market capitilizations of at least $250 million are packaging company Crown Cork & Seal (CCK) gaining 244 percent, technology firm SimpleTech (STEC) posting gains of 176 percent, and fabric retailer Jo-Ann Stores, increasing 131 percent.     
  • Phone and network equipment company Marconi PLC (MONI) tumbled the most in the first quarter, losing 82 percent.

Top-Performing Stocks
"Consumer durables tend to do well when investors anticipate an economic recovery, on the assumption that consumers will soon start opening their wallets for major purchases," Dorsey added. For example, automaker General Motors (GM) and appliance manufacturer Maytag (MYG) each gained more than 25 percent for the quarter. 

In specific industries, gambling stocks came back strong, after suffering setbacks following the Sept. 11 terrorist attacks. Mandalay Resort Group (MBG) and MGM Mirage (MGG) increased more than 20 percent. 

Semiconductor-equipment stocks also shone in the first quarter, as they showed signs of recovering from a brutal downturn. Applied Materials (AMAT), KLA-Tencor (KLAC), and Novellus Systems (NVLS) each produced stock price gains of 30 percent, amid signals that chipmakers may be ready to start spending money on equipment again.

Bottom-Performing Stocks
Despite some intermittent bright spots, most technology stocks remained in the doldrums as the bubble that burst two years ago continued to deflate, falling 10 percent for the quarter. 

The advertising recession continued to take its toll, particularly on some entertainment and online information companies. Entertainment conglomerates Vivendi (V) and AOL Time Warner (AOL) declined 30 percent and 26 percent respectively, though other companies such as Viacom (VIA) and Walt Disney (DIS) bucked the trend, posting stock price gains of more than 7 percent each. 

Communications equipment was the worst-performing industry, with JDS Uniphase (JDSU), Nortel Networks (NT), Juniper Networks (JNPR), and Ciena (CIEN) each losing more than 35 percent of their market value.

For the most current data on more than 13,000 funds and 7,000 stocks, as well as in-depth analysis on the quarter's top investing news, go to Morningstar's Quarter In Review section:
http://news.morningstar.com/QtrEnd/CoverQ102.html

To read the "The First Quarter in Stocks," go to:
http://news.morningstar.com/doc/news/0,2,13772,00.html

To read the "The First Quarter in Funds," go to:
http://news.morningstar.com/doc/news/0,2,13768,00.html

Editor's Note: If you are interested in receiving weekly, monthly, and quarterly e-mails on stock and mutual fund data, contact: Annette Larson, Morningstar Media Relations, annette.larson@morningstar.com. Preliminary quarter-end data will be distributed Monday, April 1, 2002.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, and variable annuity/life subaccounts.

Morningstar.com is listed among the top investing sites by publications such as The Wall Street JournalBarron'sWorth, and U.S. News & World Report. Morningstar provides investment information for a number of leading Web sites, including Microsoft MoneyCentral, Quicken.com, America Online, Yahoo! Finance, and Netscape Personal Finance.

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