Dow off 101 as 2007 ends on a downer

After a tumultuous year of huge gains and violent losses -- sometimes on the same day -- the stock market ended 2007 with a thud.

At the close, the Dow Jones industrials were down 101 points, 0.8%, to 13,265. The Nasdaq Composite Index was off nearly 22 points, or 0.8%, to 2,652, and the Standard & Poor's 500 Index was down 10 points, 0.7%, to 1,468.

As happened so many times in the latter half of the year, the market sold off in the last half-hour of trading.

Still, the blue-chip index finished 2007 up 6.4%. The Nasdaq closed up 9.8%, and the S&P 500 stumbled to a 3.5% gain. It was the fourth year in five that the Dow finished in the black and the fifth straight up year for both the S&P 500 and the Nasdaq.

Within those numbers were fantastic bouts of turmoil that began last summer as the nation's credit system finally started to deal with the subprime-mortgage crisis.

On 30 days during the year, the Dow fell 1% or more, compared with just 11 in all of 2006. It rose 1% or more on 27 days, compared with 14 in 2006.

Not only was today a dud, but the Dow finished down in December for only the third time in 11 years.

And while some stocks had a spectacular year, others were badly beaten down. Among the 10 S&P 500 sectors, energy was the year's top performer, with a 32% gain. Financials were the weak link, down 21%.

The crisis began when mortgage defaults and foreclosure rates started to soar. The Federal Reserve, which had announced it was more concerned with inflation, was forced to reverse course and cut rates twice to try to keep the economy from sinking into recession.

Whether the market can recover from the doldrums depends on many factors, including:

• How often the Federal Reserve cuts interest rates. Most experts see at least two rate cuts in 2008. The key federal funds rate is now at 4.25%.

• Oil prices. Crude oil finished the year at $95.98, up 57% on the year, the biggest percentage jump in oil prices since 1999. Crude has been rising at a compounded annual rate of 26% since the end of 1998.

• Whether the housing market's woes tips the economy into recession. Many argue the housing industry -- whether in terms of new-home construction or the combination of new- and existing-home sales -- is too small to cause a recession. But even bulls concede that 2008 is likely to be a slow year.

• Geopolitics. For the past few years, that has meant Iraq, Iraq, Iraq and maybe Iran. Add Pakistan to the mix after the assassination last week of former Prime Minister Benazir Bhutto.

Today's selling was pushed by energy and technology shares.

The Amex Oil Index ($XOI.X) was down 1.1% to 1,560, with ExxonMobil (XOM, news, msgs) down 1.4% to $93.69 and ConocoPhillips (COP, news, msgs) down 0.9% to $88.30.

Among tech stocks, IBM Corp. (IBM, news, msgs) was down 1.8% to $108.10 and was the weakest of the 30 Dow stocks. Google (GOOG, news, msgs) was down 1.6% to $691.48. Research in Motion (RIMM, news, msgs) was down 2.3% to $114.21.

Apple (AAPL, news, msgs) slipped 0.9% to $198.08; for a fourth day in a row, the stock crossed $200 but couldn't hold that level.

Energy prices -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$95.98	$96.00	-$0.02	8.20%	57.22%
Heating oil (per gallon)	$2.6494	$2.6370	$0.0124	4.74%	65.81%
Natural gas (per million BTU)	$7.4830	$7.3860	$0.0970	2.48%	18.80%
Unleaded gasoline (per gallon)	$2.4908	$2.4597	$0.0311	10.26%	55.47%

Prices fall on existing-home sales

The one big economic report today surprised by not being awful.

Sales of existing homes in November were down 20% from a year ago, according to a report from the National Association of Realtors.

Home sales in November ran at a seasonally adjusted annual rate of 5 million units, up slightly from 4.98 million units in October but down from 6.25 million units in November 2006.

The trade group suggested a bottom may be forming in the housing market. Wall Street seemed to be buying into the idea: home-building and financial stocks moved higher on the report.

The median price of an existing single-family home was down 3.3% to $210,000, with the biggest drop -- 6.8% to $325,800 -- coming in the Western region, which includes California, Arizona and Nevada, where sales have tumbled this year.

The inventory of unsold homes fell in November to 4.27 million, a 10.3-month supply at the current sales pace, down from a 10.7-month supply in October. A six-month supply is considered normal.

Single-family home sales rose 0.7% to an annual rate of 4.40 million from 4.37 million in October, but are 19.9% below the 5.49 million-unit pace in November 2006. The median existing single-family home price was $208,700 in November, down 3.7% from a year earlier.

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Sales of existing condominium and co-ops slipped 1.6% to an annual rate of 600,000 units in November from 610,000 in October. Sales were 20.6% below the 756,000-unit level in November 2006. The median price for an existing condo was $221,100, down 0.7% from November 2006.

Among home-building stocks, MDC Holdings (MDC, news, msgs) was up 0.2% to $37.13. Lennar (LEN, news, msgs) rose 2.2% to $17.89. D.R. Horton (DHI, news, msgs) was up 0.5% to $13.17.

Washington Mutual (WM, news, msgs) jumped 4.1% to $13.61, and Countrywide Financial (CFC, news, msgs) rose 2.2% to $8.94.

S&P 500 winners and losers 

	Dec. 31 close	Dec. % chg.	2007 % chg.
Winners
National Oilwell Varco	73.46	7.79%	140.14%
Amazon.com	92.64	2.30%	134.77%
Jacobs Engineering	95.61	14.13%	134.51%
Apple	198.08	8.70%	133.47%
MEMC Electronic Materials	88.49	14.06%	126.09%
GameStop	62.11	8.11%	125.36%
CONSOL Energy	71.52	20.65%	122.60%
Cummins	127.37	8.96%	115.55%
Monsanto	111.69	12.40%	112.62%
Express Scripts	73	7.75%	103.91%
Losers
OfficeMax	20.66	-17.13%	-58.39%
SLM (Sallie Mae)	20.14	-47.11%	-58.70%
Office Depot	13.91	-18.84%	-63.56%
MGIC Investment	22.43	-4.63%	-64.13%
Lennar	17.89	12.94%	-65.90%
Pulte Homes	10.54	3.13%	-68.18%
Washington Mutual	13.61	-30.21%	-70.08%
AMBAC Financial Group	25.77	-5.36%	-71.07%
MBIA	18.63	-48.97%	-74.50%
E Trade Financial	3.55	-22.83%	-84.17%

2007: Year of extremes

For investors in 2007, U.S. stocks provided all the drama they could hope for.

There were those soaring oil prices and a U.S. dollar that fell nearly 10% against the euro and 14% against the Canadian dollar.

Some tech stocks had huge years.

Despite repeated bouts of reassurance from official Washington that the economy and the credit system were healthy, a major financial crisis erupted when foreign investors refused to buy securities backed by home loans from American banks.

That crisis still isn't resolved and probably won't be until late in 2008 at the earliest.

There was one amazing stretch between March 29 and May 18 when the Dow rose in 31 of 36 sessions without two consecutive days of pullbacks.

The Dow pushed through 13,000 for the first time on April 25 and 14,000 on July 19. But then the subprime-mortgage problem turned into a full-blown global crisis, and stocks have been whipsawed ever since. Twice since July, the major averages have fallen as much 10%.

The Dow and S&P 500 peaked for the year on Oct. 9 and finished the year down a bit more than 6% from those highs. The Nasdaq peaked on Oct. 31 and is off 7.3% from that top.

Dow winners and losers in 2007 

	Dec. 31 close	Dec. % chg.	2007 % chg.
Winners
Honeywell International	61.57	12.95%	36.10%
Merck	58.11	0.33%	33.28%
McDonald's	58.91	0.74%	32.89%
Intel	26.66	4.47%	31.65%
Coca-Cola	61.37	-2.26%	27.19%
Losers
American Express	52.02	-8.74%	-14.26%
American International Group	58.3	7.09%	-18.64%
General Motors	24.89	-5.33%	-18.98%
Home Depot	26.94	-5.47%	-32.92%
Citigroup	29.44	-6.24%	-47.15%

The winners: Energy, tech, utilities

Energy as a winner makes sense because crude oil jumped more than 57% on the year and flirted with $100 a barrel in New York several times during the fall. ExxonMobil (XOM, news, msgs) was the eighth-best Dow stock with 22% gain. Schlumberger was up 56% and National Oilwell Varco (NOV, news, msgs), an oil and gas equipment company, led the S&P 500 with a 140% gain.

In technology, the story was big tech stocks: Amazon.com (AMZN, news, msgs), up 135%; Apple (AAPL, news, msgs), up 133%; Google (GOOG, news, msgs), up 50%; Intel (INTC, news, msgs), up nearly 32%, and Microsoft (MSFT, news, msgs), up 19%. (Microsoft is the publisher of MSN Money.)

Utilities stayed higher because they were a safer place to be than a lot of other stocks. They pay regular dividends, their earnings are predictable, and prices rise when interest rates fall. The utilities sector of the S&P 500 was up nearly 16%. The Dow Jones Utilities Average ($UTIL) closed up 16.6% on the year.

The losers: Financials

The nation's biggest bank had a dog of a year. Citigroup (C, news, msgs) was down more than 47% to under $28 on the year, its lowest level in five years. Chuck Prince was sacked as CEO. It was forced to raise $7.5 billion in new capital from the Abu Dhabi Investment Authority, and there are calls for the company to cut its dividend. And there is continuing pressure to break the financial giant into multiple pieces.

Merrill Lynch (MER, news, msgs) was off 44% and saw an eighth of its capital disappear in three months. It needed to find a new source of capital and found it in Singapore.

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But neither was close to being the worst financial stock of the year.

Several financial companies collapsed entirely.

E*Trade Financial (ETFC, news, msgs) was the worst-performing S&P 500 stock on the year, down nearly 85%. Right behind were two big bond insurers: MBIA (MBI, news, msgs), down 75%, and Ambac Financial (ABK, news, msgs), down 73%. And then came Washington Mutual's decline of 70%.

And don't forget Countrywide Financial, the nation's largest mortgage lender. It became ground zero for the subprime-mortgage crisis when it said one day in August that it needed to draw down all of its bank lines of credit to fund its daily operations. Its shares fell nearly 79%.

Short hits from the markets -- 4 p.m. ET

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.140%	3.080%	0.060	2.28%	-35.72%
5-year Treasury note yield	3.455%	3.522%	-0.067	1.08%	-26.50%
10-year Treasury note yield	4.035%	4.096%	-0.061	1.59%	-14.33%
30-year Treasury bond yield	4.459%	4.514%	-0.055	1.27%	-7.45%
Currencies
U.S. Dollar Index	76.605	76.235	0.370	0.55%	-8.62%
British pound in U.S. dollars	$1.9865	$1.9976	-0.0111	-3.44%	1.37%
U.S. dollar in British pounds	£0.5034	£0.5006	0.0028	3.56%	-1.35%
Euro in U.S. dollars	1.4594	1.4719	-0.0125	-0.42%	10.57%
U.S. dollar in euros	€ 0.6852	€ 0.6794	0.0058	0.43%	-9.56%
U.S. dollar in yen	¥111.68	¥112.58	-0.90	0.65%	-6.17%
U.S. dollar in Canadian dollars	$0.999	$0.980	0.019	-0.05%	-14.27%
Canadian dollar in U.S. dollars	$1.002	$1.021	-0.019	0.06%	16.77%
Commodities
Gold	$838.00	$842.70	-$4.70	6.20%	31.35%
Copper	$3.0410	$3.0720	-$0.031	-4.51%	5.92%
Silver	$14.9200	$14.9200	$0.03	5.33%	15.15%
Crude oil (NYMEX) (per barrel)	$95.98	$96.00	-$0.02	8.20%	57.22%

Energy prices updated Jan. 6, 2008

By Charley Blaine