By John Byczkowski
The Cincinnati Enquirer

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The stock market ended the first quarter essentially where it started, but the road from Jan. 1 to March 31 looks more like the back roads of eastern Kentucky than the highways of the western Plains.

Stocks rose 4 percent in the first 17 trading days of the year, then, "literally the bell rang on Jan. 27," said Pete Sorrentino, director of equity research for Bartlett & Co. in Cincinnati.

Investors began to dump everything they loved in 2003 and the first few weeks of the new year: technology, industrials and "big cyclicals" that ride the economic wave up. After that rotation, the S&P 500 index ended the quarter up just 1.3 percent.

"The market's making a statement that this economic cycle is headed for its peak," Sorrentino said. "We've gotten the easy growth. From here on (the cycle) matures, profit growth is pretty tame, and there's more downside risk than upside risk.

"We could move sideways for a long period of time," he said.

As usual, some stocks did better than others. Six of the 10 industrial groups in the S&P 500 rose. Consumers staples - which includes Cincinnati's Procter & Gamble Co. and its competitors - led the way, with a 5.1 percent gain.

Sorrentino said this sideways-drifting market should continue to be good for P&G and others that don't live and die by the economic cycle. That includes Cincinnati Bell, Cinergy, financials such as Fifth Third, and insurance companies such as Cincinnati Financial.

For the first quarter, big winners among local stocks included:

• Kendle International, up 41 percent. Company CFO Karl "Buzz" Brenkert said Friday that the downtown pharmaceutical testing firm's strong showing was probably a reaction to a combination of things: two consecutive profitable quarters at the end of 2003, a major restructuring of the company throughout last year, and the company's ability to diversify its customer base.

• NS Group, up 34 percent. The Newport company makes pipe for oil and gas drilling, and higher energy prices are boosting demand.

• Provident Financial Group Inc., up 25.8 percent. Cincinnati's second-largest bank announced in February it's being acquired by National City Corp. of Cleveland - a merger that will create the nation's eighth-largest bank.

• AK Steel Holding Corp., up 15.1 percent. AK Steel's shares rose along with other steel makers' because of increased demand and the market's acceptance of surcharges to cover higher raw material costs. Regardless, the Middletown firm expects to report a quarterly loss.

• Federated Department Stores, up 14.7 percent. "Federated has done an excellent job of keeping its inventories in check and should perform well in the coming months as long as consumer spending stays strong," said Kurt Barnard, forecaster and analyst of retail trends and publisher of Barnard's Retail Trend Report.

The losers among local stocks:

• Cincinnati Bell, down 19.4 percent. The company missed its fourth-quarter earnings target, because of increased spending to expand its wireless and high-speed Internet businesses, and a November refinancing that lowered cash flow.

• Milacron Inc., down 16.8 percent. The Walnut Hills company in mid-March got an infusion from two European investors which could end up giving them 60 percent of the company's equity.

• Cintas Corp., down 13.2 percent. The Mason uniform supplier struggled as investors looked for indications that uniform rentals were picking up because employers are hiring.

• Convergys Corp., down 12.9 percent. A leading provider of billing services to the wireless industry, Convergys last fall cut its earnings target for the year because of continued tight spending by its telecommunications clients for data processing.

E-mail johnb@enquirer.com