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
Dec 31, 2012 8:04PM
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Wow new stock market highs.   Obama should quit now while he is ahead.
Dec 31, 2012 8:03PM
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great!!  see what printing and spending will do?.  Way to create prosperity obozo!!
Dec 31, 2012 8:02PM
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The market has been great. Lots of bucks in my portfolio, what are all you morons complaining about. Jumpin find your picks and make it happen, that is unless you don't have two nickels to rub togehter.... Loosers!!!
Dec 31, 2012 7:59PM
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obama don't care about working family's. He keeps saying all americans will pay more taxes' only 53% will pay taxes the rest don't pay any taxes. all illegal's don't pay taxes the middle class is getting screwed again. I stopped giving to charity, I can't afford to give my hard earned money. I wonder how much the 47% give to charity? It don't pay to work unless you make more than 45,000.
Dec 31, 2012 7:59PM
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...Obama acts like a dictator......

 

The US is 16 Trillion in debt and all Obama talks about is increasing taxes (for the weathy, who already pay 85% of the tax load) and very little about reducing expenses.

 

The American public can't relate to this method of spending - in the GOP households, most balance their personal budgets and live accordingly....why doesn't the government?

 

The Dumbocrat method is tax the 51% and subsidize the other 47%. Let's be fair and all 100% should pay taxes. If you go to a restaurant, you pay or you don't eat....let's have that fair system in ALL areas!!

 

We're NOT a socialist country....but Obama is trying to make it that way. The GOP needs to stop this nonsense once and for all.

Dec 31, 2012 7:49PM
Dec 31, 2012 6:54PM
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Markets up today.... based on???? 

what has changed over the last few days except the "perception" of a swan dive off the "fiscal cliff"...

previous days the markets were down because of the lack of an agreement.

today, they are up because of a possible agreement.

come Tuesday... with no agreement....  LOOK OUT BELOW!!!

 

Tell me oh wise and wonderful wizards of this wickedly wild venue... (yeah, here, us... posting)

is it possible that there is some manipulation influencing the ridiculous swings?

 

We need market reform.... NOW!...

it has never been this volitile... it has never been this "semsitive to a statement" than it is now.

 

Vote those GNOP/TP haters of "big government" out on their a$$e$....  before they destroy this country (this nation of all people) that we've fought so hard to build, and need to continue to build to stay competiitve in this very complex, and increasingly smaller world.

 

frequency change approved!

Dec 31, 2012 6:30PM
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 here is one place where money runs like water through peoples hands .   It would be a good place of revenue for our government when some one brings it to the attenetion of our politicians .
Dec 31, 2012 6:21PM
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Here we go again!

 

Once again, it's not about the "economy", or the relative health of the companies and corporations (which we know, according to the GNOP are people too) listed in the markets... or the fact that there has been so much corrupt corporate and political greed on both sides of the congressional aisle the past 2 decades...

.

It's about the dysfunctional government we keep putting iin place year after year... despite the scars we, as a "united" country (hey, it's in our national brand isn't it??? United States of America) continue to brandish because we can't come together and agree on what our forefathers agreed on (including your parents and their parents).  That we are all in this together, rich and poor, white, black, brown red, yellow (the rainbow of colors that really makes us who we are)...

 

Where the f%#k are all the "christian moral values" these days???  Protect the poor, make sure everybody does their fair share????  Let those who have worked their whole lives making sure YOU have all you have strived for, worked for... have a safe, secure and dignified retirement that YOU hope you might someday have....

 

Nothing is free!!!  The roads you drive on, the buildings you live in, the energy you voraciously consume playing video games and watching "American Idol" or "Dancing with the Stars"....

 

IT ALL COMES AT A COST.... and a PRICE!

 

we need to stop this madness that our government puts us through day after day these past few decades....  the rich can afford to pay a little more... corporate america can afford to pay a little more (hell, move your company overseas if you dont like it, and let the real America decide how "patriotic" you are)....

 

We need to bring jobs back... made in America, by Americans, for Americans... who are paid a decent wage so they can afford the products we produce...

 

ENOUGH of those mega-million dollar salaries for the CEOs of those countries....

ENOUGH of those mega-million dollar salaries for athletes, and actors, and "non-contributors" to the betterment of our nation.  Why aren't we paying physicists, and teachers, and medical researchers, and energy innovators these ludicrous salaries???? 

 

Isn't anyone else as PI$$ED about this as I am becoming???

:-)

 

VOTE THEM OUT.... TERM LIMITS!!

If the F%$N Tea Party wants "smaller government"... then let make sure that there are NO MORE "POLITICIANS FOR LIFE"....  and pay them a "mrket value" for their services (which wouldn't be much lately)... and make them fund their own retirement, through IRA and 401K, and make them fund their own medical coverage....

 

Just like WE THE PEOPLE do.....

 

The word didn't end on 12/21/12 like the Mayans predicted... so lets make 1/1/13 the beginning of a new AMERICAN era.....

 

over and out

Dec 31, 2012 6:11PM
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Since the words: Fiscal Cliff are officially banished from the American Language tonight, may the new catch-phrase be- Republican Impeachment, and a unified movement to make it happen as quickly as possible. Straight ahead... at least two full quarters of massive losses as the bull shipt rolls away and all that remains is decay. WAKE UP. Pull up your 401K and move what you got where it can weaher out a collapse.
Dec 31, 2012 5:53PM
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Jackson much of the lower class is homeless....Or standing at the door with bags packed...

 

These SOBs should be made to stand at their desk until midnight to do the vote....

 

Now they have a couple days to wrangle about making it retroactive....

The Weasels at Work...bs..

Dec 31, 2012 5:48PM
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What an optimistic headline!  Stocks at their highest levels since 2007 - woohoo!  Wait a minute, how much value has the dollar lost in the last 5 years?  How many trillions have been pumped in by Bernanke?  How much has the fed gov borrowed and spent?  DOH!

If stocks are in such great shape, why are bonds trading near their all-time highs?  Why is gold trading near its highs?  These 3 things moving in unison are an indication of 1 thing - devaluation of the dollar.
Dec 31, 2012 5:32PM
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Stock Market Drama and Fiscal Cliff Diversion! Could The Sheeple Ask For Anything More?
Dec 31, 2012 5:32PM
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Stocks are at multi-year high.Once again stocks gain on Obama`s watch.We`ve

made a ton of money with Obama.Let`s not forget stocks were down 37% with Bush.

we have the right guy in the WH.

Dec 31, 2012 4:54PM
avatar
Well, the cans getting kicked again. I wouldn't care so much if each and every issue that came before Congress was given a deadline and an onerous punishment for failing to legislate. Maybe we wouldn't be such a fiscally upside down nation. Maybe we could believe our government is responsive again. The next Congress will take their seats and it will be politics as usual. Maybe we need to make them stand at their desks from the time a piece of legislation is introduced until it's voted on. Consider it a health initiative.
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