Jan. 11--While 2008 was a terrible year for stocks, it appears the Pacific Northwest region took a harder fall than most.

Last week D.A. Davidson & Co. released its numbers from Davidson 99 Regional Stock Index, which is comprised of 99 stocks from companies operating in the Northwest and Rocky Mountain states. In 2008 the index showed a loss of 41 percent. In comparison, the S&P 500 was off by 25 percent on December 29.

Fred Dickson, chief market strategist for D.A. Davidson & Co., said part of the problem was this area had a higher concentration of financial, natural resources and energy companies, which were beaten down more than many other industries.

The top three performing stocks in the index were out of Utah and in the medical industry: NPS Pharmaceutical (up 62 percent on the year), Myriad Genetics (up 42 percent) and Merit Medical (up 29 percent). The worst performing stocks were Monoco Coach (down 94 percent on the year), Huntsman Corp (down 87 percent) and Coeur d'Alene Mines (down 82 percent).

Among Washington companies in the index, Alaska Air Group did the best, with a 43 percent rise, while Frontier Financial had the biggest drop, down 67 percent.

"It was tough going throughout the year for financial firms such as Frontier, but Alaska was able to see a bit of a rebound as the market reacted to dropping fuel prices," Dickson said.

Dickson believes there's a lot of work ahead for Pacific Northwest stocks. Looking at the coming year in terms of the national economy, he thinks there will be some very ugly economic reports in the next six months, followed by less frequent bad news in the second half of the year if proposed economic stimulus plans take hold and bargain hunters start coming back into the market.

Looking at the Pacific Northwest region, real estate and unemployment are significant economic indicators for Dickson in the new year. In past recessions, unemployment rates are a lagging indicator, so most of the economy is on the upswing before the jobless rate would start going down. It may be different this time, though.

"The recovery in real estate may be more tied to unemployment than in past recessions," Dickson said. "There needs to be some housing stability before we can see things turning around, but rising unemployment will continue to dampen real estate."

In terms of stocks, Dickson said aerospace industry will start to perk up, while health care should continue to see steady, average growth. Bank stocks, which crashed in October and November, may see some bounce-back. The high-tech industry, which has become more tied to the global economy, may see more disappointing sales numbers for the next few quarters. This is because the global economy was a little late to the economic slowdown.

"It will particularly tough for start-up technology companies that are looking at the global market to drive growth," Dickson said.

He expects stocks and the economy in this region to begin recovering in the second half of the year, but it will be a slow, steady one, rather than the V-shaped, rapid growth sometimes seen at the end of a recession.

"In the long run, a slow, stable recovery is what this economy needs after all the volatility we've seen," Dickson said.

Biz Talk runs each Sunday. Reach Dave Gallagher at 715-2269 or dave.gallagher@bellinghamherald.com. Visit his business blog online at TheBellinghamHerald.com/blogs.

-----

To see more of The Bellingham Herald or to subscribe to the newspaper, go to http://www.bellinghamherald.com.

Copyright (c) 2009, The Bellingham Herald, Wash.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NASDAQ-NMS:MYGN, NASDAQ-NMS:MMSI, NYSE:HUN, NYSE:CDE, NYSE:ALK, NASDAQ-NMS:FTBK,

A service of YellowBrix, Inc.