Dow ends 2011 up 5%; S&P 500 finishes flat

Updated at 6 p.m. ET

2011, a year that dismayed investors with frequent gut-wrenching bouts of volatility, produced one last day of losses for investors. Most of the losses came in the last two hours.

The Dow Jones industrials ($INDU) finished the year sporting a 5.5% gain. The Nasdaq Composite Index ($COMPX) closed down about 1.8%. And, amazingly, the Standard & Poor's 500 Index ($INX) ended almost exactly flat. To be precise, the change was four one-hundredths of a point: 1,257.60 compared with 1,257.64 in 2010. The percentage change was 0.0032% and is nearly the index's smallest change -- positively or negatively -- ever.

That the changes for the major averages would be so small may be hard to believe in a year that saw the major averages rise more than 8% by April 29 and then fall 17% or more from those levels by early October.

But there was a silver lining in all of this. U.S. stocks rebounded in the fourth quarter and ended the year holding their own compared with stocks elsewhere. You can't say that in Germany, where the Xetra Dax Index ($DE:DAX) finished down 15%. Or France, where the CAC-40 Index ($FR:PX1) was off 17.3%. Or Canada, where the S&P/Toronto Stock Exchange Index ($CA:OSPTX) looks to end down 11%. Or China, where the Shanghai Composite Index was off 21.7% for the year.

Article continues below.
Here's why we say the S&P 500's change is nearly the smallest ever. The index's change in 1947 was, in fact, zero. But the index was calculated only in two digits. Now it can be calculated out in many digits.

The close meant that the Dow and S&P 500 finished down 0.6% for the week. The Nasdaq was off 0.5%, with the Nasdaq-100 down 0.4%.

The Dow ended December with a 1.4% gain, while the S&P 500 ended up 0.9%. The Nasdaq was off 0.6%, while the Nasdaq-100 dropped 0.8%.

The quarterly gains for the Dow and S&P 500 -- 12% and 11.2% -- were their best since the third quarter of 2009. The Nasdaq's 7.9% gain was its best for a quarter since the fourth quarter of 2010.

During the year, the market had to absorb the effects of the Arab spring, the Japanese earthquake in March, a continued weak U.S. real estate market, a downgrade of U.S. debt in August, massive flooding in Thailand that hurt technology manufacturers and the constant worries about how Europe might solve its debt crisis.

IN 2012, the market faces more Europe, threats by Iran to blockage the Persian Gulf, and the potential of a loud and brutal U.S. election cycle.

Markets for the week
			12/30/2011			12/23/2011			% chg.			YTD chg.
Dow Industrials			12,217.56			12,294.00			-0.62%			5.53%
S&P 500			1,257.60			1,265.33			-0.61%			0.00%
Nasdaq			2,605.15			2,618.64			-0.52%			-1.80%
Russell 2000			740.92			747.98			-0.94%			-5.45%
Crude oil			$98.83			$99.68			-0.85%			8.15%
(per barrel)
U.S. Dollar Index			80.52			80.24			0.36%			1.56%
10-yr. Treasury			1.87%			2.03%			-7.83%			-43.39%
Gold			$1,566.80			1,606.00			-2.44%			10.23%

McDonald's, IBM, Pfizer lead the Dow for 2011; B of A lags
This was a year when the sexiest of stocks weren't the big winners.

Among Dow stocks, the three top performers this year were McDonald's (MCD), IBM (IBM) and Pfizer (PFE), which are looking to finish up 30.7%, 25.3% and 23.6%, respectively. The laggards: Bank of America (BAC), down 58.3%; Alcoa (AA), down 43.8%; and Hewlett-Packard (HPQ), down 38.8%.

Among S&P 500 stocks, the winners are Cabot Oil & Gas (COG), El Paso (EP) and Intuitive Surgical (ISRG), up 100.5%, 93.1% and 79.6%, respectively. Laggards are solar-panel-maker First Solar (FSLR), Monster Worldwide (MWW) and Alpha Natural Resources (ANR), down 74.1%, 66.4% and 66%, respectively.

Special mention must be made of Netflix (NFLX), down 60.6%. All of that loss came after July 13, when the company embarked on a plan to split itself in two and double its fees. Consumers hated the move. Investors hated it even more.

Intuitive Surgical led the Nasdaq-100, followed by Alexion Pharmaceuticals (ALXN), up 65%, and Hansen Natural (HANS), up 77.5% and 76.2%, respectively. The big laggard was BlackBerry maker Research In Motion (RIMM), down 75%, followed by First Solar and Netflix.

Apple (AAPL), which was briefly the most valuable company in the world this past summer, finished up 25.6% on the year. Its $376.4 billion market capitalization was second behind Exxon Mobil (XOM) at $406.27 billion. Exxon was up 15.9% on the year.

Treasurys were among the best places to park money. Overall year-to-date total return was about 8.6%. Long-term Treasurys produced a total return of 33%, their best performance since 2008.

The reasons for those fabulous returns were:

• The Federal Reserve's campaign to keep rates low to boost the economy.
• The flight to safety for many global investor but especially investors in Europe worried that the euro currency would collapse.
  

Gold moves up as crude falls back
As stocks slipped, crude oil (-CL) in New York was down a bit. Natural gas (-NG) fell to its lowest levels since 2009. Interest rates were lower. Gold (-GC) and silver (-SI) rallied from Thursday's drubbing.

Gold settled up $25.90 to $1,566.80 an ounce after falling $23.20 on Thursday. Silver was up 60 cents to $27.92, and copper was up 6.7 cents to $3.436 a pound.

For the year, gold was up 10.2% after a runup this summer that peaked with a 33% gain. The metal fell 10.5% in December alone.

The decline was so sharp that, with Thursday's close, the Dow had produced the better total annual return for investors. With Friday's market decline, the Dow is likely to produce a total return of about 8.5%.

Crude oil, meanwhile, settled down 82 cents to $98.83 a barrel. Brent crude was off 57 cents to $107.50 a barrel. For the year, crude oil finished up 8.2% after a 15.2% gain in 2010 and a 78% increase in 2009.

Natural gas was another story, down  3.8 cents to $2.989 per million British thermal units and off a whopping 32% for the year. The close was the lowest since November 2009.

Gas producers have been hurt by too much supply coming onto the market and abnormally warm November and December weather. There is, for example, no snow in the Northeast.

Integrated oil companies like Exxon Mobil and Chevron (CVX) were higher for the year. Chevron was up 16.6%. Natural gas producers like Apache (APA) and Devon Energy (DVN) were off 24% and 21%, respectively.

Spain has a budget problem
It was hard to say whether there was any kind of a catalyst at work Friday. The closest was that Spain announced its budget deficit was approaching 8% of gross domestic product, more than expected. So the country will impose new spending cuts to control the problem.

That offset some optimism about the U.S. economy, which has exhibited some strength of late. Jobless claims have been moving lower. Real-estate markets may be stabilizing. Manufacturing looks fairly strong.

Automakers are expected to report decent sales for December on Tuesday. Ford Motor (F) said it has sold more than 2 million vehicles this year, its best year since 2007. Ford was up 5 cents to $10.73. But it's been a hard year for the company, with shares off 36.1%.

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$98.83			$99.65			-1.52%			8.15%
(per barrel)
Heating oil (-HO)			$2.9142			$2.9201			-3.67%			14.57%
(per gallon)
Natural gas (-NG)			$2.9890			$3.0270			-15.80%			-32.15%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.6574			$2.6694			3.87%			8.32%
(per gallon)
Brent crude			$107.38			$108.01			-2.84%			13.33%
(per barrel)
Retail gasoline			$3.2690			$3.2540			-0.79%			6.41%
(per gallon; AAA)

Moody's cuts Sears' rating
Fitch Ratings cut Sears Holdings' (SHLD) long-term credit rating to CCC from B and kept its outlook negative. The downgrade follows news Tuesday that Sears plans to close up to 120 of its stores after a dismal holiday selling season. Shares fell $1.12 to $31.78.
 
American Airlines parent AMR (AMR) shares were off 17 cents to 35 cents. Late Thursday, the New York Stock Exchange said it was suspending trading in the shares on Jan. 5. The shares aren't meeting the minimum bid requirement. The carrier, which sought bankruptcy protection in late November, expects trading to move to the Pink Sheets after the delisting. AMR is down more than 88% in 2011.
 
Dow component Verizon Communications (VZ) could be the subject of consumer ire as the company reportedly plans to start charging customers $2 per transaction to make one-time bill payments online or over the phone. But investors did not seem worried today. Shares climbed 7 cents to $40.12.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0100%			0.060%			0.00%			-91.67%
5-year Treasury note			0.830%			0.875%			-12.82%			-58.83%
10-year Treasury note			1.871%			1.897%			-9.53%			-43.39%
30-year Treasury bond			2.889%			2.907%			-5.65%			-33.77%
Currencies
U.S. Dollar Index			80.522			80.911			2.59%			1.56%
British pound			1.5538			1.5413			-0.93%			-0.44%
(in U.S. $)
U.S. $ in pounds			£0.644			£0.649			0.94%			0.44%
Euro in dollars			$1.30			$1.30			-3.44%			-3.00%
(in U.S. $)
U.S. $ in euros			€ 0.771			€ 0.772			3.56%			3.09%
U.S. $ in yen			77.34			77.63			-0.62%			-4.95%
U.S. $ in Chinese			6.34			6.32			-0.83%			-4.21%
yuan
Canada dollar			$0.983			$0.000			0.14%			-2.08%
(in U.S. $)
U.S. dollar			$1.019			$1.020			-0.14%			2.13%
(in Canadian $)
Commodities
Gold (-GC)			$1,566.80			$1,540.90			-10.48%			10.23%
(per troy ounce)
Copper (-HG)			$3.436			$3.369			-3.90%			-22.73%
(per pound)
Silver (-SI)			$27.9150			$27.3150			-14.90%			-9.77%
(per troy ounce)
Wheat (-ZW)			$6.5275			$6.4525			6.31%			-17.82%
(per bushel)
Corn (-ZC)			$6.4650			$6.38			6.33%			3.86%
(per bushel)
Cotton			$0.9168			0.9136			0.85%			-36.69%
(per pound)
Coffee			$2.2965			2.2705			-3.06%			-4.51%
(per pound)
Crude oil (-CL)			$98.83			$99.65			-1.52%			8.15%
(per barrel)