Market Ends Year With First Annual Gain Since 1999
By Elizabeth Lazarowitz, Reuters
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The Dow rose 25 percent this year.
NEW YORK (Dec. 31) - Blue chips posted slim gains to end at their 2003 peak on Wednesday as investors paused to reflect on the blazing rally over the past year that helped the market rack up its first annual gain since 1999.
Signs of an economic rebound, higher corporate profits and the success of U.S.-led forces in toppling Iraqi leader Saddam Hussein gave stocks a hefty boost in 2003, helping them to recover from a punishing 3-year bear market.
''It was the first time in a long time that we've seen corporate profits hold and move even slightly higher compared to expectations,'' said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking.
Low interest rates throughout the year helped build hopes for an economic recovery and feed investors' appetite for stocks, Fitzpatrick added.
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For the year, the blue-chip Dow rose 25.3 percent, its biggest yearly gain since 1996. The S&P 500 gained 26.4 percent to post its largest annual gain since 1998, and the tech-laden Nasdaq soared 50 percent, its biggest increase since 1999.
Stocks spent much of Wednesday circling the unchanged mark, with technology stocks coming under modest pressure as some traders locked in profits in a sector that has helped lead the market higher after years of wrenching declines.
''The Nasdaq is down on just a little bit of profit-taking, but, in general, the performance in the month of December has been spectacular,'' said Arnie Owen, a managing director at investment bank and research firm Merriman Curhan Ford & Co. in San Francisco. ''We're looking at a very constructive 2004, with better corporate earnings and continued low interest rates.''
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The Dow Jones industrial average rose 28.88 points, or 0.28 percent, to end at 10,453.92, its highest level since since March 2002. The Standard & Poor's 500 Index gained 2.28 points, or 0.21 percent, to 1,111.92, its highest peak since April 2002. The technology-packed Nasdaq Composite Index slipped 6.51 points, or 0.32 percent, to 2,003.37.
In December, the Dow surged 6.9 percent, the S&P 500 rose 5.1 percent, and the Nasdaq climbed 2.2 percent.
Trading was light on Wednesday, with many Wall Street traders on vacation over the shortened week. About 986 million shares changed hands on the New York Stock Exchange, while about 1.8 billion shares were traded on the Nasdaq. Both the NYSE and the Nasdaq will be closed on Thursday for New Year's Day.
POSITIVE SIGNS
Wall Street reacted coolly to the latest economic data -- a government report showing U.S. jobless claims fell to their lowest level in nearly three years last week, raising hopes the economy's resurgence will accelerate job creation.
The Labor Department said 339,000 unemployed workers filed for unemployment insurance in the week ended Dec. 27, down from a revised 354,000 a week earlier and much lower than forecasts. The level of new claims was the lowest since President George W. Bush's inauguration on Jan. 20, 2001.
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The positive jobs report, however, failed to support the dollar, which fell against other currencies and hit an all-time low against the euro on Wednesday. The greenback's recent drop has fed fears foreigners, faced with getting less bang for the buck, will flee dollar-denominated assets.
Bearish sentiment toward the dollar has intensified after the release of some disappointing economic data on Tuesday and fears of potential attacks in the United States during the New Year celebrations.
Merck & Co. Inc. helped bolster the Dow after the company said on Tuesday it has submitted its new arthritis drug, Arcoxia, to the Food and Drug Administration to review for U.S. marketing approval.
The FDA will determine whether it will accept the application as submitted within the next 60 days, Merck said. Merck shares rose 70 cents, or 1.5 percent, to $46.20.
Halliburton Co. shares fell a day after a U.S. military energy unit said it would take over the job of providing fuel for Iraq, a move that would end an earlier Pentagon deal with the company that was controversial for allegations of price-gouging.
The Pentagon's Defense Energy Support Center said it would award new contracts through a competitive bidding process. The move comes after the Pentagon awarded a unit of Halliburton, once headed by Vice President Dick Cheney, a no-bid contract in March to rebuild Iraq's oil industry. Halliburton shares fell 22 cents, or 0.8 percent, to $26.
16:45 12-31-03
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