Local stocks mixed in first half of 2017 amid continued market rally

Chattanooga Times Free Press (TN)

July 03--As stock trading starts for the second half of the year today, most investors are enjoying richer portfolios after one of the best starts to the year in a decade.

But results are more mixed for Chattanooga's publicly traded companies.

Despite the drama of Washington D.C. and uncertainty over terrorism and political events, the economy has continued to improve this year, pushing up the overall stock market by more than 8 percent.

The S&P 500 index, the broadest measure of the stock market, is up 8.2 percent this year, while the Dow is up 8 percent.

The Nasdaq has racked up a gain of 14.1 percent -- the biggest gain since 2008. The Russell 2000 is up 4.3 percent.

While Chattanooga's biggest companies shared in the market appreciation, four of the seven stock-traded companies headquartered in Chattanooga lost value in the market during the first half of 2017.

Shares of both Dixie Group and Mohawk Industries, two carpet companies benefitng from the upturn in housing starts, jumped by more than 20 percent in the first six months of the year.

The stock value of Chattanooga's biggest company, Unum Corp., rose in value similar to the overall market with a 6.1 percent gain so far this year. Unum, a major employee benefit company and the world's biggest disability insurer, is benefiting by improved employment so far this year, and its investment portfolio should gain from higher interest rates later this year.

But higher interest rates and cutbacks by many major retailers undermined the value of CBL & Associates Properties in the first half of 2017. CBL, the biggest developer of shopping malls in the South, dropped in value by nearly 27 percent in the past six months.

Miller Industries and Astec Industries also were hurt by the lack of a major infrastructure spending program so far this year.

Overall, the stock market continued to gain, however, as most companies reported improved earnings and investors expect the economy to continue to improve.

"Global stock markets continue to grind higher, shrugging off political turmoil in Washington and Rio, Middle East tensions and increased Brexit uncertainty," said John Praveen, managing director of Prudential International Investments Advisors. "Stocks remain supported by strong earnings growth."

Strong corporate earnings and revenue have underpinned the market's gains this year. Expectations among investors that President Donald Trump and the Republican-led Congress would slash taxes, boost federal spending on infrastructure and enact other business-friendly policies have also helped drive stocks higher.

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