Market ends year in somber mood
NEW YORK » Wall Street ended a painful year with another steep loss yesterday as investors glumly anticipated that 2008 would see a continuation of the uncertainty and turbulence of 2007.
The Dow Jones industrials fell 101 points, the latest in a string of triple-digit moves that became commonplace in the just-ended year amid a continuum of bad news about housing, faltering mortgages and shrinking credit. Thanks to a big first-half advance, they still managed to finish 2007 with a respectable increase of 6.43 percent -- not as large as the 16.29 percent increase in 2006, but a better performance than the modest loss in 2005.
The Dow's annual gain came even after it posted its worst fourth-quarter drop in 20 years, amid billion-dollar losses at the world's biggest financial firms and falling spending by consumers whose budgets have been crimped by record-high oil prices and declining home prices.
"Considering all that's going on, the market really acted pretty well," said Todd Leone, managing director of equity trading at Cowen & Co.
There was more downbeat news on housing yesterday. The National Association of Realtors said November existing home sales rose 0.4 percent to an annual rate of 5 million -- the first rise in nine months.
Falling home prices have made it hard for struggling homeowners to refinance their mortgages, and the slump in construction activity has hurt homebuilders and other housing-related industries.
Still, there were some slivers of optimism yesterday. The U.K.'s Observer newspaper reported Sunday that Merrill Lynch & Co. was in talks over the weekend to line up capital from investors in China and the Middle East in exchange for portions of the Wall Street firm. Merrill, like many other financial houses, has seen its portfolio lose billions of dollar in value due to misplaced bets on mortgages.
The Dow fell 101.05, or 0.76 percent, to 13,264.82. The blue-chip index remains below its Oct. 9 record high of 14,164.53, at which point it was up more than 13 percent year-to-date.
The Standard & Poor's 500 index and the technology-dominated Nasdaq composite index also declined yesterday, but both posted annual gains for the fifth straight year.
The S&P 500 index fell 10.13, or 0.69 percent, to 1,468.36, to end 2007 with a gain of 3.53 percent. It reached a record close of 1,565.15 on Oct. 9.
The Nasdaq fell 22.18, or 0.83 percent, to 2,652.28, to finish the year with 9.81 percent gain. Despite the market's volatility, this was the best performance for the Nasdaq, still well below its tech boom highs, since 2003.
The Russell 2000 index of smaller companies fell 5.73, or 0.74 percent, to 766.03 yesterday. The small-cap index finished the year down 2.75 percent.
Government bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 4.03 percent from 4.12 percent late Friday, and is down nearly 17 percent for the year.
Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to a light 1.15 billion shares.