U.S. Stocks On The Rise In Final Trading Session Of 2008
NEW YORK (MarketWatch) -- Stocks gained ground in light trading Wednesday, the final session of 2008, as investors took stock of the worst year for the U.S. market since 1931 and as some staked out fresh positions ahead of the new year.
"Good riddance to 2008," said Kim Rupert, analyst at Action Economics.
Year to date, the Dow Jones Industrial Average have slumped nearly 35%, the S&P 500 has lost 40%, and the Nasdaq Composite is off almost 42%. The S&P 500 index, widely considered as the most representative of the market gauges for tracking U.S. stocks, had not seen a worse year since 1931, right in the midst of the Great Depression.
But in the final week of the year, the market has been reclaiming a bit of ground, with the Dow moving up 3%, the S&P 500 adding 1.2%, and the Nasdaq gaining by 1.6%.
By Wednesday afternoon, the Dow industrials stood higher by 77 points, or 1%, to 8,745, with 26 of its 30 components on the rise.
"What we may be seeing is some early buying of prospective bottom-fishing candidates," said Marc Pado, market strategist at Cantor Fitzgerald, referring to the practice of attempting to buy beaten-down shares at their lowest point.
However, "it doesn't take a lot to move stocks around in this environment," Pado said. Markets are closed Thursday in observance of New Year's Day.
Leading the advances among blue chips, shares of aluminum giant Alcoa Inc. rallied nearly 6% and United Technologies rose 1%.
Meanwhile, the S&P 500 rose nearly 9 points, or 1%, to 900, and the Nasdaq Composite gained 22 points, or 1.5%, to 1,573.
As is typical for this time of the year, trading volume remained very light, with 430 million shares changing hands on the New York Stock Exchange and 242 million shares trading on the Nasdaq. Advancing issues topped decliners by more than 3 to 1 on the NYSE and by 2 to 1 on Nasdaq.
By sectors, industrials and consumer discretionary led among the gainers, with both up more than 2%, followed by materials, up 1.8%, and technology, up 1.7%.
The heavily influential financials sector, mostly responsible for this year's staggering losses, was up 1.6%.
Late Tuesday, the Federal Reserve said it will begin buying mortgage securities backed by Fannie Mae , Freddie Mac and Ginnie Mae in early January.
The Financial Times reported that American International Group may ask the Fed to ease rules governing its asset disposals. The insurer may ask for bidders to be allowed to pay for more of the assets in shares, rather than cash, to increase competition, the newspaper reported.
The energy sector, meanwhile, gained, as crude-oil prices reversed earlier losses and rallied back above $42 a barrel. Oil futures have tumbled more than 60% this year, the biggest yearly loss since crude started futures trading in New York in 1983.
Turning to 2009
"While 2009 begins Thursday amid hopes of a better year, it is likely to be the same old story for the markets for some time to come," Rupert said. "Although the collapse in economic activity was swift, the road to recovery isn't likely to be as quick."
"With the U.S., Japan, and much of Europe now in recession, and China's steam engine slowing precipitously, the focus for investors early in the new year will be on the degree of traction from the global rate cuts and the trillions of dollars in stimulus," the Action Economics analyst said.
Also Wednesday, the dollar gained some ground after a report showed U.S. jobless claims unexpectedly fell in the latest week. But the Labor Department cited seasonal volatility, and indeed, the four-week average of claims stood at the highest level since 1982.
In a quiet day for corporate news, shares of Dell Inc. rose 1% after the computer maker said Mike Cannon, president of global operations, will retire effective Jan. 31, and Mark Jarvis, chief marketing officer, will leave the company his fiscal quarter. The announcement came alongside a plan to reorganize the firm around global business groups. .
The chemicals industry also remained in focus after The Wall Street Journal reported that privately held LyondellBasell Industries may file for bankruptcy. The Netherlands-based company, which employs around 16,000 people and has large U.S. operations, has told lenders it's trying to line up as much as $2 billion in bankruptcy financing, the newspaper reported.
Asian markets ended 2008 on a high note, with Australia's S&P/ASX 200 closing up 1.9%, and shares in Europe finished broadly higher.
U.S. markets had closed broadly higher on Tuesday, helped by a late rally from financial stocks and further government aid for General Motors Corp. , as the Dow industrials closed up 184 points.
By Nick Godt