In the gloomiest quarter in two years for Washington investors, one stock glowed like it was radioactive.
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The company was USEC Inc. of Bethesda, which holds a government monopoly for manufacturing fuel for nuclear power plants. The stock soared on the theory that, with crude oil and gasoline selling at record prices, nuclear power will make a comeback.
USEC -- that's short for U.S. Enrichment Corp. -- was the best-performing Washington stock in the first three months of the year, ending the quarter up 68 percent.
Two out of every three local stocks fell during the quarter as the market retreated in response to the Federal Reserve's decision to ratchet up interest rates.
In the three months ended March 31, The Washington Post-Bloomberg regional stock index fell 4.7 percent -- its first quarterly loss since spring 2003, when it lost 3 percent. By comparison, the Dow Jones industrial average and the Standard & Poor's 500-stock index both lost 2.6 percent; the Nasdaq Stock Market composite index fell 8.1 percent.
Even in down markets, the diversified economy of the Washington region usually produces a batch of big winners, but not last quarter. Only 27 of the more than 220 stocks in the regional index gained as much as 10 percent, while 87 stocks lost more than 10 percent.
Most of the region's biggest names managed to resist the downdraft and make modest gains. Lockheed Martin Corp. gained 9.9 percent; General Dynamics Corp., 2.3 percent; Marriott International Inc., 6.2 percent. The standout was Coventry Health Care Inc., the Bethesda provider of managed medical services, the stock of which gained 28.4 percent in the quarter.
Shareholders of Washington's two biggest financial institutions, Fannie Mae and Freddie Mac, continued to pay the price of accounting scandals at the government-chartered mortgage companies. Fannie's stock fell 23.5 percent, Freddie's 14.3 percent. (Fannie may remain mired in its accounting morass for months to come. But Freddie closed the quarter on Thursday by announcing earnings for 2004, bringing its financial statements up to date for the first time since 2003.)
On a percentage basis, the big loser was Xybernaut Corp., a Fairfax company that in nine years of making "wearable computers" never has made a profit. The company kept itself afloat with stock sales, which are now being investigated by the Securities and Exchange Commission. The stock, which fell 66 percent to 42 cents a share during the quarter, dropped to 24 cents Friday after the SEC probe was disclosed.