Stocks jump, finish at multiyear highs

The Dow and S&P 500 finishes for the year are their best since 2007 as hopes build for a fiscal cliff deal. The Nasdaq's year-end finish is its best in 13 years. Apple shoots higher.

By Charley Blaine Dec 31, 2012 4:32PM
© Adam Gault, OJO Images, Getty ImagesUpdated: 8 p.m. ET

When the stock market finished 2011, many analysts said 2012 would be more of the same: a bad start and strong finish.

In fact, 2012 started with big gains for the major indexes, but the market peaked in mid-September and early October and stumbled into the close.

Until Monday, when hopes for a deal on the fiscal cliff set off the biggest one-day rally for stocks since mid-November.

As important, the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) enjoyed their their best year-end closes in five years. The finish for the Nasdaq Composite Index ($COMPX) was its best since 1999.

The 2012 gains came despite worries about the fiscal cliff. In addition, the market had to weather fears about economic health in Europe and China and a toxic political culture at home.

Congress was still grappling Monday with how to minimize the effects of the fiscal cliff -- some $600 billion in tax increases and spending cuts set to take effect Jan. 1. But it appeared the guts of a tax bill were coming together. The deal would raise taxes on households that make more than $450,000 a year and individuals who make more than $400,000.
The Dow closed up 166 points to 13,104. It was the Dow's first year-end close above 13,000 since 2007 and best one-day gain since Nov. 23.

The S&P 500 climbed 24 points to 1,426, its first year-end close above 1,400 since 2007. The Nasdaq jumped 59 points to 3,015, its first close above 3,000 since 1999. The gains for the S&P 500 and Nasdaq were their best since Nov. 19.

The Dow ended the year up 7.3%, an improvement over the 5.5% gain it saw in 2011. The S&P 500 gained 13.4% for the year, compared with no gain at all a year ago. The Nasdaq's 16% gain was double its 7.9% gain in 2011.

If there was a downside to the finish, it was that the major averages closed 3% or so  below their peaks for the year.

The Dow finished 3.7% below its high of the year, 13,610, set on Oct. 5. The S&P 500 peaked at 1,466 on Sept. 14. The Nasdaq's closing high was 3,184 on Sept. 14.

What the plans entails
The emerging deal would also permanently patch the Alternative Minimum Tax, raise the estate tax rates for high-value properties, extend unemployment benefits for a year, extend several middle-class tax cuts for five years and add a temporary fix to Medicare reimbursement rates, Politico.com said.

It was not clear if the Senate would vote on the bill today. The House wasn't expected to vote on a plan until Tuesday at the earliest. So, technically it means the nation will fall over the fiscal cliff.

There was unhappiness on Democratic and Republicans about the bill. Liberals said the President gave up too much. It wasn't clear if Republicans in the house will vote for the bill.

The deal that's coming together does not deal with federal spending. That will come later and may well set up a bigger battle over the national debt limit.

What's ahead in 2013
If you want to guess what will happen with markets in 2013 -- and remember, most predictions are wrong -- the odds favor a volatile first half of the year and a stronger second half.

It's not clear if the market can move much higher. Stock-price gains of 10% are hard to justify if the economy is growing at 2% to 3% a year, Bill Gross, chief investment officer at PIMCO, told CNBC today. 

But some pieces of the economy are finally joining the economic recovery, especially housing and automobiles.

At the same time, for now, the European appears to be stable, although deeply stressed. China's economy is showing signs of strength and is a reason why commodity prices, particularly copper and iron prices, have been rising of late.

Apple's big role in the market
The gains for the S&P 500 and the Nasdaq were influenced by one stock: Apple (AAPL), which closed up $22.58 to $532.17. It gained 31.4% in 2012, despite falling about 24% after peaking in mid-September.

Apple represents roughly 17% of the market capitalization of the Nasdaq-100 Index ($NDX), which was up 16% for the year. It's about 4% of the market cap of the S&P 500.

The Nasdaq-100 is down nearly 6% since the end of September. Apple is down 21%. So, Apple represents more than half of the index's decline. 

The S&P 500 was down 2.7% between Sept. 28 and Friday. Without Apple's sell-off, the index would have been down just 1.7%.
Apple aside, the market gained strength from some of its weakest performers in 2011: banks and homebuilders. The Philadelphia Bank Index ($BKX) was up 29.2% this year.

Bank of America (BAC) was the best performer in that index as well as the Dow and S&P 500, rising nearly 107% to $11.50. The banking giant nearly collapsed in the 2008 financial crisis but seems to be getting problems from its disastrous Countrywide Financial acquisition under some control. The company is starting to generate "buy" ratings from analysts as opposed to "sell."

American International Group (AIG), which had to be propped up by the government in the financial crisis, paid off all its government aid, is making money and is up 52% on the year. Sounds good, but AIG is still down 97% from its all-time highs in 2004.

The Philadelphia Housing Sector Index ($HGX) is 65% higher for the year, tops among 44 indexes that I track. The reason: A housing recovery seems to have begun. Demand and prices are rising in many markets. While many would-be buyers are renting, they will start to consider homeownership if they see a stable national and local economies and job markets.

The laggard group has been the NYSE Arca Gold Bugs Index ($HUI), down 11.3%.

Gold (-GC) itself, however, finished up $19.90 to $1,675.80 an ounce. For the year, the metal finished 7% higher. Silver (-SI) settled the day at $30.227 an ounce, up 25.2 cents and up 8.3% for the year. 

Light sweet crude oil (-CL) in New York was up $1.02 to $91.82 a barrel.  Brent crude was up 51 cents to $111.13 a barrel. Light sweet crude was down 7% for the year. Brent crude may finish up 3.5% when trading ends at 6 p.m. ET on Monday.

More on Money Now

Markets for the year



2012

2011

Dec. chg.

YTD chg.
Dow Industrials

13,104.14

12,217.56

0.60%

7.26%
S&P 500

1,426.19

1,257.60

0.71%

13.41%
Nasdaq 

3,019.51

2,960.31

2.00%

15.91%
Nasdaq-100

2,660.93

2,277.83

-0.63%

16.82%
Russell 2000

849.35

740.92

3.34%

14.63%
Crude oil 

$91.82

$98.83

3.37%

-7.09%
(per barrel)











U.S. Dollar Index 

79.87

80.52

-0.37%

-0.81%
10-yr. Treasury yield

1.756%

1.871%


8.90%

-6.15%
Gold

$1,675.80

$1,566.80

-2.15%

6.96%
(per troy ounce)
























Dow Jones Transports 

5,306.77

5,019.69

3.67%

5.72%
Dow Jones Utilities

453.09

464.68

-0.23%

-2.49%
Phila. Semiconductors

384.06

364.44

2.59%

5.38%
Phila. Bank Index 

51.28

39.38

5.60%

30.22%
NYSE Arca Oil Index

1,241.84

1,229.10

2.08%

1.04%
Philadelphia Housing  Index 
171.29

102.93

2.73%

66.41%













Nikkei 225 Index (Japan)

10,395.18

8,455.35

10.05%

22.94%
Xetre Dax Index (Ger,)

7,612.39

5,898.35

2.79%

29.06%
FTSE 100 Index (UK) 

5,897.81

5,572.28

0.53%

5.84%
62Comments
Jan 1, 2013 3:35PM
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With some kind of a tentative deal and a punt or a can kick....The Markets rose 166 on Monday..

 

Old ReTOG...Predicted this along with the Eleventh Hour, Midnight fiasco.

Also projecting,predicting about 300-500 upside for this week..

(go back and check previous comments for verifications)

 

So we are 1/2 or 1/3 the way,on the upside remark..And maybe we can finally pull off the Santa Rally.

Stick with Charley Blaine and old Re-TOG....We leave all others in the dust. 

And a Happy and Prosperous New Year 2013 to All.......

Jan 1, 2013 2:23PM
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JAV......I just try to be a Happy Person around all the nice Holidays...Because of being an old curmudgeon the other 10 months of the year, or at least being accused of it...

(Yes, it was just re-affirmed from someone sitting on a couch behind me.)

(Dictionary definition: Usually a grumpy old man.)

 

Washington and our elected officials, plus some in Our State, can sure take the wind out of the sails.

We had a good year, NOT a great year....But everything went along pretty decent.

And BEST of all, I'm still on the "right side" of the grass...

And I think 2013 is going to be much,much better.

Jan 1, 2013 9:55AM
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I may be wrong, BUT looks like he's taking some Leadership rolls the last few days...

 

Funny how I remember Bushy, saying how he had some "Political Capital" after he was "elected" on the second go around...

 

Now Obama has got that "Capital" for the next 4 years after being "elected twice" and I think he is going to use it for the betterment of American...

And the Republicans just can't stand it, let alone stand themselves....You have lost !!

.......buckle your belts........ 

Jan 1, 2013 4:30AM
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All this noise about the debt and yet Japan has a higher debt ratio than the U.S. but where are the Japanese people screaming about the end of the world?    I really believe that most of you will be really upset if the U.S. does not go under just to prove that you are not stupid.   It is worth noting that the majority of Americans who voted as to whether there would be a debt deal and said negative were all wrong.   If you watched the stockmarket instead of watching Fox News, you should have known that there would be a deal.  No expected deal the stocks would have tanked.   As to devaluing the dollar, against which currency?    I see no inflation so I do not think you know much about economics.  
Jan 1, 2013 2:28AM
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Believe me or not. For 2013 and behind "CASH IS KING" No Invoices no trail. Big Mony

Bingo

Jan 1, 2013 12:19AM
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There are numerous indicators that the economy has turned the corner and is in recovery, but this doesn't mean that everything is fixed.  It just means that some of the more important elements that fuel recovery are in play.  It is possible that the Tea Party will find a way to sabotage the recovery.  They would prefer economic collapse to allowing Obama to look successful.  If that means bringing the country to its knees, they have already proven they are willing to do that.

We have a free market economy, but as with all systems of government and finance, there must be checks and balances.  A completely free market economy would be financial dictatorship by a very few super wealthy elitists.  There would be no restrictions on their exploitation of labor, on money manipulation, on conspiring to drive competitors out of business, etc.  The Tea Party seems to truly believe that a dictatorship of the rich would be good for the country.  They fail to understand that an aristocracy of wealth is not freedom or democracy.  It is dictatorship.  The wealthy few control everyone else because they control all the resources, all the jobs, all the money.  If you dare to contradict them, you lose your job, your house, your money, and eventually, as our freedoms are taken from us, your life.

Unrestricted capitalism is not good for the country or the ideals on which it was founded.  You can't be free if you are held in thrall by a rich corporation that controls every aspect of your life.  Capitalism must be held in check by regulation, rule and law.  There must be anti-trust laws.  There must be workplace safety laws.  There must be laws to protect working women from sexual harassment.  There must be laws to prevent corporations from polluting the water and the earth.  There must be laws that require corporations to be responsible and responsive to the people who work for them, buy their products, and live near their factories.

In short, excess never works.  Everything in moderation, nothing in excess.  Over the last several years we have allowed the super rich to act in excess.  It is time to demand that they moderate their habits and act responsibly.

Dec 31, 2012 11:04PM
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Yes the election is over and Obama is President, not dictator. Look at the electoral map, that ocean of red counties across the country represents another equal body of government, the House of Representatives and they were elected too, by people that are not takers like the racist lady in Detroit. The Senate doesn't have a clue, they don't know if the ball is pumped or stuffed. They can't even develop a budget. President Obama, how about some leadership for a change? Stop wasting the countries wealth or we may see the taxed class march on Washington DC armed with pitch forks. Like Syria when the dictator ignores the people, I don't think, these people want their Automatic weapons for hunting deer.

Dec 31, 2012 10:26PM
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BTW.....Charley....,,,,Good job. Happy New Year.
Dec 31, 2012 10:05PM
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Really? Seriously? That's about all I can say. Anyone feeling better about the economy. SHUT DOWN the PRESS!
Dec 31, 2012 9:59PM
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I guess  a lot of the 47% shouldn't be surprised.   It seems our congress, which works part time. Has decided it needs a raise.   How outrageous can it get?  They get 219 days off each year.  Now they can't get  an agreement to stop this fiscal cliff mess, ,so they all get a raise.  Is it me? or is there something very very wrong with our political system.
Dec 31, 2012 9:44PM
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Take away the gov quantitative easing and where would the market be?  This market is artificially propped up and everyone knows it.  What a sham!
Dec 31, 2012 9:15PM
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Rob Green....Are you really an investor...??   Or did you just look at some numbers...?
Dec 31, 2012 9:04PM
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The Republicans (aka sore losers) can't accept the fact that all indicators for 2013 look good:
housing, the stock market, unemployment, job increases, etc. They will continue (as in 2012)
to do everything they can to screw up Obama's second term even if it means taking the  country
down either with the fiscal cliff or the debt limit. These "no tax" morons should include Orville in 
their caucus because they can't make decisions without his approval . Republicans: get over it. The election is a done deal. I know this is probably asking too much but try doing what's best for  98% of the country ( not the 2% of the millionaires and billionaires).
Dec 31, 2012 8:45PM
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On what volume?!!!  Totally useless story, just more propaganda for the Obama admin from MSDNC.
Dec 31, 2012 8:34PM
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so wall street just yawned over the ''fiscal hoax''? thats because thats just what it is.both parties wanted to screw the middle class not the rich and thats what they got. feel dumb much? organize and change it, these people sure arent going to.
Dec 31, 2012 8:30PM
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...because peope fail to learn anything from their past mistakes...
Dec 31, 2012 8:10PM
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FOXY AZ.Blonde - you really don't know how the market works and what pumping billions of dollars into it does.  Time for you to stay on the sidelines with your comments until you pass Economics 101.
Dec 31, 2012 8:06PM
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Unfortunately the Dow has to go to 14,400 just to get back to where it was in 2008...back when Geo Bush was in office and before the Obama crash.
Dec 31, 2012 8:06PM
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obozo's welfare army has no idea what this means..

Dec 31, 2012 8:04PM
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we are so far in debt, we have to print money to buy our own bonds.  nice....
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