Wall Street ended its worst year since the Great Depression with a pulse – a meager but critical sign for investors eager for any evidence that the worst may be over.
Only time will tell. But for now, investors are cheering the end of 2008.
For the year, the Dow Jones industrials were off 33.8 percent, their steepest decline since 1931. The Standard & Poor’s 500 index tumbled 38.5 percent, while the tech-heavy Nasdaq plunged 40.5 percent for its worst year ever.
Only two stocks in the Dow ended higher for the year – discount chain Wal-Mart and fast-food giant McDonald’s – two beneficiaries of consumers’ new penny-pinching ways.
Yesterday, stocks earned gains across the board in the final trading day of 2008 as upward of $1 trillion in targeted government rescue cash began spreading beyond banking rescues toward broader business troubles, such as collapsed auto sales and commercial real-estate woes.
The Dow Jones industrial average rose 1.27 percent, or 108.00 points, to 8,776.39, while the S&P 500 gained 1.42 percent to 903.25, up 12.61. The Nasdaq jumped 1.70 percent to 1,577.03, up 26.33 points.
“The tone is less onerous for stocks,” said Steven Goldman, chief market strategist at Weeden & Co.
Some investors also began venturing away from the safe allure of Treasury securities and back into stocks on concerns there might be a Treasury bubble forming.
Indeed, Treasury prices declined on lower investor demand, sending yields surging for the first time in weeks. The yield doubled on the ultra-safe, three-month T-bill to 0.12 percent from 0.06 percent on Tuesday, while the yield on the 10-year Treasury note jumped to 2.22 percent from 2.06 percent.
Rising oil prices – due to Middle East worries – also helped push up the Dow, with widely held Exxon Mobil rising 1.6 percent, or$1.24, to $79.83.
Oil traders sent crude zooming 14 percent to more than $44 a barrel, despite excess inventories of crude and gasoline.
Traders said Wall Street is betting President-elect Barack Obama will help restore confidence in the economy.
“There’s an optimism that the new team is going to do something,” said Michael Cuggino, president and portfolio manager of Permanent Portfolio Funds.
Meanwhile, rates continued to dip for 30-year fixed-rate mortgages to 5.10 percent, their lowest level since 1971 – a hopeful sign. Christmas week also saw mortgage applications climb to their highest level in five years.