The Nasdaq Composite Index jumped an eye-popping 50 percent to finish above 2,000, returning to that level for the first time in almost two years. And the Standard & Poor's 500 Index and the small-cap Russell 2000 Index each soared 26 percent.
On Wednesday the Dow added 29 points, or 0.3 percent, to finish the year at 10,453.92 while the Nasdaq fell 6.51 points to 2003.37.
With the economy continuing to show signs of sustainable recovery and the Federal Reserve agreeing to hold interest rates at 40-year lows, the bulls appear to have plenty of momentum left for 2004.
The majority of this year's gains came in two spurts -- one from mid-March to June, just after the U.S. began its war with Iraq as investors began to bet on an economic recovery in the second half, and another from early August to mid-October, when the recovery actually began to materialize in corporate earnings reports.
In typical "buy the rumor" fashion, investors dove into stocks in mid-March on the belief that a recovering economy would yield strong profit growth. In this case, it did, but the "sell the news" aspect of this never really came into play because the earnings growth was so good that multiples never really expanded.
Much of the final quarter of the year was spent in a holding pattern as money managers sought to guard their gains. But in late December, the Dow convincingly rose above the psychological barrier of 10,000. And this week, the Nasdaq Composite made its own symbolic breakthrough by surpassing the 2,000 level.
The Dow's climb represents an increase of 45 percent over the index's near-term low of 7,197.49 in October 2002. At its nadir for 2003, the blue-chip barometer fell as low as 7,416.64 in mid-March.
The broad S&P 500 index rallied a respectable 26.5 percent for 2003 with its finish at 1,111.92. Its low for year was 788.90 in mid-March.
The most remarkable gains came in the Nasdaq Composite, and the Russell 200 index, indicative of the out-performance of technology and small cap companies within the broad market.
The Nasdaq Composite rose 50 percent to close at 2,003.37. This represents a 96 percent jump off a near-term low of 1,108.49 in mid-October of 2002, and a gain of 60 percent off its 52-week low of 1,253.22 in mid-March.
The Russell 2000 index surged 46 percent to finish 2003 at 557. Its low for the year was 343.06 also in mid-March.
Twenty-five of the Dow's 30 component stocks ended 2003 higher, led by chip giant Intel, which surged 105 percent. As for the rest of the tech members of the blue-chip fraternity, Hewlett-Packard leapt 32 percent, and IBM tacked on 20 percent. Microsoft had to settle for a muted gain of 6 percent.
The next best performer in the Dow was Caterpillar, which soared about 83 percent, followed closely by fellow heavy industrial companies - Alcoa, up 67 percent, Honeywell , and 3M, each surging 38 percent and United Technologies, advancing 53 percent
The financial blue chips were no slouches either with J.P. Morgan Chase rising 53 percent, AmEx adding 37 percent, and Citigroup, tacking on 38 percent.
Other standouts included GM, Home Depot, McDonald's and Walt Disney, all gaining more than 40 percent.
The worst performing stock in the Dow was Eastman Kodak, down 27 percent. The company has struggled to transition its traditional film business with the advent of digital photography.
The other weak spots within the blue chips were the telecommunications components, AT&T and SBC Communications, down 22 percent and 4 percent, respectively, and the drug components, Merck and Johnson & Johnson, off 19 percent and 4 percent, respectively.
Highs and lows within the Nasdaq 100
The greatest appreciation within the Nasdaq 100 was Research In Motion with a jump of more than 412 percent. The next closest gain was by ATI Technologies, which saw a rise of almost 228 percent.
An amazing 96 of the 100 stocks in the index finished the year in positive territory. The four exceptions were Cephalon), Lincare Holdings, Medimmune, and First Health Group, which was the biggest loser, down more than 19 percent.
A full quarter of the index saw gains of more than 100 percent, with Lam Research, and Sandisk, rising more than 200 percent.
The dollar finished out its worst year, on an annual return basis, against the euro since the single currency's 1999 inception. The euro rose 20 percent against the greenback to $1.26.
Natural-gas futures ended the year with a 29-percent gain despite suffering a drop of as much as 18 percent in the last three weeks. February natural gas closed at $6.189 per million British thermal units on the New York Mercantile Exchange, down 41.1 cents for the session, but up from the year-ago finish of $4.789.
February crude closed at $32.52 per barrel, down 27 cents for the session. Futures prices are up by $1.32 per barrel from the year-ago close of $31.20. In contrast, they're also off around 19 percent from the pre-Iraqi war high of nearly $40 from back in February.
Gold futures closed lower on the New York Mercantile Exchange, but prices ended the year with a nearly 20 percent gain. February gold closed at $416.10 an ounce, down $1.10 for the session.
The closing level is almost $68 an ounce above the year-ago close for gold futures prices. Uncertainty surround Iraq, the economy, and the steep decline in the U.S. dollar during the year kept investment demand high for the precious metal.