Dow up 108 as a miserable 2008 finally ends

By Charley Blaine

The worst year for stocks since the 1930s finally ended today on a positive note.

The Dow Jones industrials closed up 108 points, or 1.3%, to 8,776. The Standard & Poor's 500 Index added 13 points, or 1.4%, to 903, and the Nasdaq Composite Index jumped 26 points, or 1.7% to 1,577.

The Dow picked up more than 292 points in the last two days of trading. The Nasdaq hadn't seen a gain on the last day of trading of any year since 1999.

But the cheer came on a day with light trading volume, and the results for the year were dismal. The Dow fell 33.8% for the year, its worst performance since 1931 -- and its third-worst year ever. The S&P 500 fell 38.5% for the year, its worst since 1937. The Nasdaq's 40.5% loss was its worst annual loss ever.

• See how bad 2008 was -- and who won and lost

Markets will be closed Thursday for New Year's and resume regular operations on Friday.

The crash of 2008 trimmed the Dow by 43% through Nov. 20. That day the Nasdaq showed a year-to-date loss of 54%.

The market has shown some resilience since then, with the Dow up 16.2%, the S&P 500 up 20% and the Nasdaq up 19.8%.

• Top Stocks blog: Check the Dogs of the Dow for 2010

Is that a signal that the market finally bottomed this fall? Possibly. But big challenges remain for investors, including:

• A serious recession.

• Continues stress for housing.

• Rising joblessness. Employers are expected to shed thousands of jobs in 2009.

The market rally today was very broad with special strength in financial, energy and tech stocks.

Crude oil jumped 14.3% to $44.60 a barrel after the government reported a smaller-than-expected gain in U.S. fuel supplies. At the same time, Middle East tensions and Russia's threat to cut natural gas supplies to Ukraine also helped prices move higher.

A Bloomberg survey of 33 analysts projected crude will rebound to an average $60 a barrel in 2009, a 45% increase.

Meanwhile, Bank of America (BAC, news, msgs) jumped 6.3% to $14.08 and was the top performer among the 30 Dow stocks. American Express (AXP, news, msgs) rose 3.1% to $18.55.

Twenty-five of the 30 Dow stocks showed gains, along with 458 S&P 500 stocks and 73 stocks in the Nasdaq-100 Index ($NDX.X).

The Nasdaq pushed higher, thanks to strength in Qualcomm (QCOM, news, msgs), up 2.6% to $35.83, Research in Motion (RIMM, news, msgs), up 4.7% to $40.58, and Google (GOOG, news, msgs), up 1.5% to $307.65.

Data on jobless claims released by the Labor Department today showed that 492,000 people were added to the unemployment rolls this week. While this was a smaller amount than most economists expected, and 94,000 less than were added in the previous week, it does show a continuing alarming rise in the number of people who are losing their jobs. However, the markets have seemed to shrug this data off in recent weeks.

• Top Stocks blog: Shanghai Stock Index falls 65%

"Trading volumes were thinner than your average supermodel," as the investing letter UK Analyst put it. Less than 1 billion shares changed hands on the NYSE, where the average is about 1.5 billion.

But the gains were welcome as the U.S. stock market heads toward the finish of its worst year since 1931. Almost all of the world's major indexes have seen their worst year to date in 2008.

When the holidays are over, investors will simply wait for President-elect Barack Obama to take office. If his economic stimulus plan seems credible, markets could be set for a surge.

The markets for the year

	Dec. 31 close	Month chg.	Chg. for qtr.	YTD. chg.
Dow Jones Industrial Avg.	8,776.39	-0.60%	-19.12%	-33.84%
S&P 500 Index	903.25	0.78%	-22.56%	-38.49%
Nasdaq Composite Index	1,577.03	2.70%	-24.61%	-40.54%
Russell 2000 Index	499.45	5.56%	-26.51%	-34.80%
Dow Jones Utilities Index	370.76	-3.00%	-13.46%	-30.38%
Dow Jones Transportation Index	3,537.15	0.71%	-23.37%	-22.61%
Nikkei 225 Index	8,859.56	4.08%	-22.26%	-42.12%
Xetra Dax Index	4,810.20	3.01%	-17.51%	-40.37%
FTSE 100 Index	4,434.17	3.41%	-9.55%	-31.33%
Crude oil per barrel	$44.60	-18.07%	-55.68%	-53.53%
10-yr. Treasury yield	2.24%	-24.11%	-41.36%	-34.62%
Gold per troy ounce	$884.30	7.97%	0.40%	5.53%

Mortgage rates at a record low

Mortgage rates continue to drop. The average rate on a 30-year fixed-rate mortgage declined to a 37-year low of 5.10% for the week ending today, down from 5.14% the week before, according to lender Freddie Mac's weekly survey. That's also down a percentage point from this time last year when the 30-year mortgage rate was 6.07%.

Rates on 15-year fixed-rate mortgages also fell to 4.83% from 4.91% last week and 5.68% a year ago.

Despite the low rates, demand for U.S. mortgage applications was unchanged last week, the Mortgage Bankers Association reported today.

The low mortgage rates are driving demand for refinancing.

Energy prices -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$44.60	$39.03	$5.57	-18.07%	-53.53%
Heating oil (per gallon)	$1.4057	$1.2880	$0.1177	-16.01%	-46.94%
Natural gas (per million BTU)	$5.6220	$5.8590	-$0.2370	-13.64%	-24.87%
Unleaded gasoline (per gallon)	$1.0082	$0.8853	$0.1229	-12.04%	-59.52%

Shakeup at Dell

Dell (DELL, news, msgs) is shaking up its top management, The Wall Street Journal reported today. Michael Cannon, president of global operations, is expected to take on a different role, and Chief Marketing Officer Mark Jarvis is reportedly to leave the company.

The company is in the process of consolidating international operations into single lines of business, and streamlining its management structure in order to become more efficient, a Dell spokesman told The Journal.

Dell shares have dropped from over $25 per share to $10 per share. Chief Executive Michael Dell has been trying to turn the company around.

The company laid off 900 workers earlier this year, and several other top executives have received their walking papers in the past few months.

Dell closed up 1 cent to $10.24 but fell 58.2% on the year.

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Online holiday sales fall 3%

Online sales for the holiday period dropped 3% in comparison with that period in the previous year, according to data released by the research company comScore today.

Apple (AAPL, news, msgs) and Amazon (AMZN, news, msgs) won the most traffic over the holidays, according to comScore. Wal-Mart (WMT, news, msgs) also enjoyed a 4% rise in sales.

Total sales amounted to $25.5 billion, somewhat less than analysts had predicted for the period.

• Top Stocks blog: The day the malls stood still

GMAC rushes out new financing offer

Just after receiving a $6 billion rescue from the Treasury on Tuesday, GMAC announced a new auto finance offer.

The company said it would offer 0% financing on the purchase of five GM 2008 models and 0.9% to 5.9% loans on dozens of other 2008 and 2009 models. GM has not been able to make a 0% financing offer this year because GMAC had suffered in the credit crunch.

GM is clearly eager to show that it is putting the bailout funds it has received to work as quickly as possible. GM got $13.4 billion in rescue funds from the Troubled Asset Relief Program two weeks ago along with the $6 billion GMAC is taking in.

China opens market to 3G phones

The Chinese government announced today that it would issue licenses for 3G phone technology, a move effectively opening its market to major international vendors, the Associated Press reported today.

The government will issue licenses for two global 3G standards and for a domestic Chinese standard.

The move opens up a market potentially worth about $41 billion, according to Chinese Industry Ministry statistics. While the exploitation of the standards will go to Chinese companies, the supply of equipment and services under those standards will create a new market for companies around the world.

Sectors to watch in '09

Investors can be expected to move off defensive stocks in the coming year, and to start bottom-fishing with more vigor in undervalued companies. Here are some sectors they might consider:

• Oil stocks have fallen along with the price of oil, which is down today to $38.48. But almost all analysts predict that it will come back in 2009, with the most bullish forecasting a rise to $60 per barrel, and the less enthusiastic predicting about $45 per barrel. But the price rise will almost certainly push oil stocks up, particularly once a sustained upward movement is established. The International Energy Agency sees demand for oil increasing at about 1.6% per year through 2030. That means the per-barrel price will continue to rise, and oil companies will need to grow in order to meet the demand. For now, stocks like Exxon Mobil (XOM, news, msgs) and Chevron (CVX, news, msgs) are trading at multi-year lows, and have strong balance sheets, as Paris-based BNP Paribas analyst Edmund Shing points out.

• Tech stocks are also trading at levels not seen for many years. But semiconductor stocks, for example, could well see an upturn in 2009, according to Needham semiconductor analyst Quinn Bolton. The Philadelphia Semiconductor Index is down about 48% for the year, and chip sales are predicted to drop in the first quarter of 2009. Bolton thinks demand will pick up as of the second quarter of the year, driving semiconductor stocks up. Looking at broader tech stocks, the bright side is that demand will pick up as of the second quarter in 2009, say analysts at UBS in London. The downside: Many tech companies will have trouble financing or restructuring debt, so the best bets are probably the well-heeled ones.

• Infrastructure stocks also show a good chance of rebounding, largely because the Obama stimulus plan calls for deep-dish investment in major projects. Then there is also the fact that emerging markets will come out of the recession ready to put money back into development. Stocks like ABB (ABB, news, msgs) and Foster Wheeler (FWLT, news, msgs) could be winners.

Asia and Europe up slightly

There was little market activity in Asia and Europe today.

Japan's markets were closed today. The MSCI Asia Pacific Index gained 0.9%, and Hong Kong's Hang Seng Index ($HSIX) rose 1.1%.

In Europe, the Dow Jones Stoxx 600 Index increased 0.9%, the FTSE Eurofirst Index was up 0.9%, and London's FTSE 100 Index ($GB:UKX) gained 1.1%.

Short hits from the markets -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	0.115%	0.090%	0.025	475.00%	-96.34%
5-year Treasury note yield	1.551%	1.463%	0.088	-20.22%	-55.11%
10-year Treasury note yield	2.244%	2.087%	0.157	-24.11%	-44.39%
30-year Treasury bond yield	2.691%	2.583%	0.108	-22.83%	-39.65%
Currencies
U.S. Dollar Index	82.150	81.780	0.370	-5.25%	7.11%
British pound in dollars	$1.4734	$1.4609	0.0125	-4.23%	-25.93%
Dollar in British pounds	£0.6787	£0.6845	-0.0058	4.42%	35.01%
Euro in dollars	$1.4010	$1.3968	0.0041	10.37%	-4.15%
Dollar in euros	€ 0.7138	€ 0.7159	-0.0021	-9.39%	4.33%
Dollar in yen	90.65	90.71	-0.06	-5.17%	-18.95%
Canadian dollar in U.S. dollars	$0.818	$0.821	-$0.0029	1.23%	-17.63%
U.S. dollar in Canadian dollars	$1.224	$1.218	$0.0051	-1.21%	21.41%
Commodities
Gold	$884.30	$870.00	$14.30	7.97%	5.53%
Copper	$1.4100	$1.3205	$0.09	-14.52%	-53.63%
Silver	$11.2950	$10.9800	$0.32	10.41%	-24.30%
Corn	$4.0700	$3.9625	$0.11	16.45%	-10.65%
Crude oil (NYMEX) (per barrel)	$44.60	$39.03	$5.57	-18.07%	-53.53%

Andrew Rosenbaum contributed to this report.

Andrew Rosenbaum contributed to this report.