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Sat, Jan 02, 2010 - Page 10 News List

Wall Street ends year on weak note

OUT WITH A WHIMPERMarkets worldwide gained throughout the year last year, while economic growth was in the negative except for Brazil, India and China

AFP , NEW YORK AND PARIS

Traders William Walsh, left, and Sean Ridgeway, center, celebrate as confetti falls at the close of trading in the Eurodollar Options trading pit at the CME Group Inc’s Chicago Board of Trade on the last trading day of the year in Chicago, Illinois, on Thursday. US stocks fell as an unexpected decrease in jobless claims added to evidence the economy is strengthening enough to allow the Federal Reserve to withdraw more stimulus programs.

PHOTO: BLOOMBERG

Wall Street suffered the slings and arrows of one of the most tumultuous years in stock market history last year, but managed a stunning recovery that eclipsed a weak finish.

Wall Street stocks stumbled on Thursday amid thin volumes as many traders were away from their desks ahead of the New Year holiday yesterday.

The Dow Jones Industrial Average slid 1.19 percent to 10,428.05.

The technology-rich NASDAQ composite shed 0.97 percent at 2,269.15 and the broad-market Standard & Poor’s 500 index lost 1 percent at 1,115.10.

However, compared with 12 months ago, the blue-chip Dow was up 18.82 percent, its steepest annual gain since 2003.

The NASDAQ gained a whopping 43.89 percent over the year and the S&P 500 index was up 23.45 percent.

Still, the blue-chip Dow remains down 26 percent from its 2007 highs and is still struggling around the 10,000 level first reached in 1999.

The story is similar for the S&P 500 index, up 23.45 percent for last year, but still hovering near 1999 levels and 29 percent below record highs in October 2007.

The NASDAQ has failed to even come close to the boom days that pushed the index above 5,000 in March 2000, but closed last year with a blistering rise of 43.89 percent.

Though the market ended the year with solid gains, that hardly tells the story of a dramatic near-meltdown for the main indexes followed by a rebound that capped the final year of a “lost decade” for stocks.

The market opened last year sinking fast as the financial crisis deepened with the September 2008 collapse of Lehman Brothers. In 2008, the Dow lost 33.84 percent, the steepest drop since 1931, while the S&P slid 38.49 percent. The NASDAQ tumbled 40.54 percent in 2008, the biggest loss year since its creation in 1971.

It was a Depression-like scenario, with the broad market plunging more than 60 percent from October 2007 to March last year — farther and faster than in 1929.

However, by the spring, some began to sense a recovery in the economy, and Wall Street regained confidence, setting up one of the biggest market rallies in history over the ensuing months.

Ed Yardeni, at Yardeni Research, said the market appeared to turn when the S&P index slid to the ominous number of 666.

“When the S&P 500 bounced off 666 on March 6, I felt like Professor Robert Langdon in The Da Vinci Code,” he said.

The question for many investors now is whether this snapback was a “bear market rally” or the beginning of a new bull run that carries the market to new highs.

“Investors are nervous but optimistic heading into the new year,” said Michael Hartnett, chief global equity strategist at Bank of America Merrill Lynch Global Research.

Milton Ezrati, economist and market strategist at investment firm Lord Abbett, said the stock market is still licking its wounds as optimism rebounds.

“It has been a humbling and sobering experience, to say the least,” he said. “But for all the caution taught by the events of 2008-2009, signs of recovery have become unmistakable, and, as ­expected, the market has moved up in anticipation of the economic improvement likely in 2010.”

Other world markets also recorded a spectacular rebound last year even though the economy was in crisis, but confidence had not been completely restored and there were fears for this year.

In Frankfurt, the market ended the year 23 percent higher, Paris closed 22.32 percent up and London registered a 22.07 percent gain for the year.

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