Despite new economic data, investors appear to be increasingly mystified as to the actual condition of the economy. On May 20, the Federal Reserve lowered its 2008 growth forecast to 0.3%–1.2% from 1.3%–2.0%, citing inflation and unemployment concerns. Coupled with record-high crude oil prices of $135 a barrel and renewed liquidity concerns in the financial industry, investors initiated a sharp decline. In the four days beginning May 20, the Dow Jones Industrial Average, S&P 500 and NASDAQ fell 4.2%, 3.6% and 2.8%, respectively. The following week, on May 28, the government released several conflicting economic reports suggesting better than expected durable goods orders, as well as increased manufacturing and personal spending figures for April, especially when excluding transportation items. In addition, the first-quarter GDP growth rate was revised upward to 0.9% and crude oil prices retreated to end the month at $127.35 a barrel.

While most of these economic statistics remain near recent lows, investors appeared moderately reassured, helping the markets mitigate some of its earlier losses. The S&P 500 and NASDAQ managed to finish in positive territory for the month, climbing 1.1% and 4.6%, respectively, while the Dow trended lower by 1.4%. Year to date, the Dow is down 4.7%, the S&P 500 has lost 4.6% and NASDAQ has dropped 4.9%.

All four IBO Stock Indexes finished the month higher. The Process/Metrology/Motion Instrumentation and Diversified Instrumentation Stock Indexes recorded the largest gains, climbing 6.6% and 7.4%, respectively, while the Laboratory Instrumentation and Lab Consumables/Equipment Stock Indexes rose 3.8% and 3.3%, respectively.

Laboratory Instrumentation Stock Index

For the month, the Laboratory Instrumentation Stock Index gained 3.8% to close at 622.99. Seventeen companies improved, while six companies declined. Transgenomic led the Index for the month and the year, improving 51% and 59%, respectively. X-Rite led the Index lower for the month and year, falling 30% and 85%, respectively. Year to date, the Index has fallen 5.1%, with 13 companies trading lower, nine companies improving and one company trading flat.

Earnings reports continue to positively influence the Index. On May 1, Cepheid reported a loss of $0.03 a share in the first quarter (see page 12), $0.05 better than analysts’ expectations, and reaffirmed its full-year adjusted EPS guidance of $0.05–$0.08. Shares finished 6.3% higher the following day. The same day, Harvard Bioscience announced first-quarter adjusted EPS of $0.08, an increase of 14% from the previous year, and confirmed full-year adjusted EPS guidance of $0.36–$0.38. Shares traded only marginally higher the following day. On May 6, Bio-Rad Laboratories reported EPS of $1.06 for the first quarter, $0.07 better than analysts’ expectations, leading shares up 2.7% the following day. On the same day, MOCON announced first-quarter EPS of $0.16 (see page 12), a 7% increase from the previous year. Shares closed 1.9% higher on the news. Also this month, MOCON raised its dividend on May 19 by half a cent to 8.5 cents a share.

On May 7, OI Corporation reported a strong increase in first-quarter earnings, from a loss of $0.13 a share last year to a profit of $0.09 a share, sending shares up 7.3%. Concurrently, Transgenomic reported flat earnings for the first quarter (see page 12) compared to a loss of $0.02 a share in the previous year, and shares remained unchanged. Luminex announced a first-quarter loss of $0.03, $0.01 better than expectations, on May 8, and reaffirmed full-year guidance, leading share up 4.4%. On May 5, Bruker announced first-quarter adjusted EPS of $0.03 (see pages 10, 12) , only half of what analysts were expecting, yet shares traded flat.

On May 6, X-Rite reported a first-quarter loss of $0.12 a share (see page 12), $0.11 wider than analysts’ expectations, and forecasted a decline in revenues for 2008. Shares fell 4.7%. Then, on May 13, the company’s CFO resigned after serving for less than three months. However, investors were unperturbed, as shares traded flat. On May 29, X-Rite approved an increase to the number of authorized shares from 50 million to 100 million.

On May 8, Caliper Life Sciences reported a first-quarter loss of $0.12, $0.01 wider then expected, yet shares remained unchanged. Finally, on May 15, Starlims reported first-quarter adjusted EPS of $0.17 (see page 12), comparable to the previous year. Shares were unchanged. Earlier in the month, on May 12, the company launched its new strategic informatics consulting unit, leading shares 6.7% higher.

On May 29, Oppenheimer initiated coverage of Beckman Coulter with an “Outperform” rating. And, on May 30, Lazard Capital initiated coverage of Sequenom with a “Buy” rating.

Process/Metrology/Motion Instrumentation Stock Index

For May, the Process/Metrology/Motion Instrumentation Stock Index gained 6.6% to 352.69, with six companies improving and two companies losing ground. Nanometrics led the Index, climbing 12%, while RAE Systems fell 9%. Year to date, the Index is down 10.9%, with RAE Systems leading all decliners, down 47%, and only Veeco Instruments in positive territory, up 15%.

On May 1, Strategic Diagnostics announced flat EPS for the first quarter, in-line with expectations, yet shares slipped 3.2% the following day. On May 13, ICx Technologies reported a loss of $0.36, $0.01 better than analysts’ expectations. Shares declined 3.9% the following day.

Lab Consumables/Equipment Stock Index

The Lab Consumables/Equipment Stock Index rose 3.3% in May to 520.25, with five companies improving and two companies declining. Pall improved the most, gaining 17%, while QIAGEN fell 10%. For the year, the Index is up 3.0%, with four companies in positive territory and three companies trading lower. Techne leads the Index, up 19%, while Kewaunee Scientific is down 12%.

On May 28, Pall released preliminary fiscal third-quarter sales figures, which showed that sales grew 18.3%, leading shares up 3.5%. On May 2, Leerink Swann downgraded Millipore to “Market Perform” from “Outperform.” Kewaunee Scientific increased its dividend by $0.01 to $0.08 a share on May 30.

Diversified Instrumentation Stock Index

The Diversified Instrumentation Stock Index improved 7.4% for the month to 114.03, with five companies gaining ground and Teledyne Technologies declining 5%. Agilent Technologies led the Index, gaining 24%. For the year, the Index is down 4.6%, with four companies in positive territory and two companies trading lower. AMETEK leads the Index, up 10%, while Danaher is down 11%.

On May 14, Agilent reported adjusted fiscal second-quarter EPS of $0.51, beating analysts’ expectations by $0.03, and forecasted adjusted third-quarter EPS of $0.46–$0.50, in-line with analysts’ expectations. Shares climbed 6.4%. Standard & Poor raised its outlook on Agilent to “positive” from “stable” on May 19, causing shares to gain 3.3%. On the same day, AMETEK lowered its second-quarter and full-year EPS by 9% and 2% to $0.55–$0.57 and $2.42–$2.47, respectively, due to stock-based compensation expenses. Shares declined 3.8% on the news.

International

In May, three Pacific Region companies traded higher, while Horiba and Techcomp declined 15% and 8%, respectively. Hitachi High-Technologies improved the most, climbing 16%. For the year, four companies are down, while Shimadzu has gained 13%.

This month, eight European companies improved and six declined. Genetix led all companies, rising 13%, while Robotic Technology Systems fell 10%. For the year, six companies show positive returns, seven firms remain in negative territory and Biohit is unchanged. Renishaw and Genetix lead the way, each up 21%, while Cybio has fallen 56%.

On May 28, Shimadzu reported fiscal-year 2008 EPS of ¥46.36 ($0.41) (see page 12) compared to ¥45.20 a share ($0.39) in the previous year. The company also increased its annual dividend by 12.5% to ¥9.0 ($0.08) a share.