Friday, December 31, 2010

Closing The Books on 2010

The market finished with another flat day, its 6th in a row, and volume was anemic again. Considering the market was down -6% as late as Aug. 31st, the rally in the latter half of the year was pretty impressive.

Here is a quick wrap-up from

Stocks were flat for most of the final session of the year, but ran into a flurry of selling in the final minutes. Their performance for 2010 was strong, though.

For most of December the stock market has made only incremental moves. This session was essentially the same as stocks spent the better part of the day hugging the neutral line before a late slip. Though most of the action has appeared to be a listless, sideways drift, today's narrow loss was only the fifth time in December that the S&P 500 actually settled lower.

Such a strong performance helped the benchmark index achieve a monthly gain of almost 7%, a quarterly gain of more than 10, and a near 13% gain for the year. Despite that, the S&P 500 is still at levels that were first seen in early 1999.

Telecom represented this session's strongest sector. It advanced 0.3% today, and 12% for the year. With a near 26% annual gain, consumer discretionary stocks made up the top performing sector of this year, but they ended today down 0.2%. In contrast, defensive-oriented health care and utilities made the most muted moves this year. They settled with annual gains of 0.7% and 0.9%, respectively.

Of the three major equity averages, the Nasdaq Composite closed out 2010 with the biggest gain. It advanced close to 17% this year. However, its performance today was lackluster as large-cap tech issues weighed on it throughout the session. Investors drove the Dow to a 11% gain this year. Caterpillar (CAT 93.66, -0.21) was the best performing blue chip. It ended 2010 64% higher than where it started.

Small caps and mid-cap stocks have had an even stronger year; specifically, the Russell 2000 and the S&P 400 both climbed about 25% this year. But today they fell 0.8% and 0.7%, respectively.

Little attention was paid to the dollar again today. It ended the day down 0.5% against a basket of competing currencies after it had notched a new one-month low earlier in the session. The greenback gained only 1.5% this year, however. Commodities had a quiet start to trade, but closed 2010 in impressive fashion.

Broad buying in the space sent the CRB Commodity Index 1.7% higher today. That helped to drive a 17.4% gain for the year. Among the more widely watched commodities, oil futures prices rallied out of the red to a 1.7% gain at $91.35 per barrel. Oil futures prices climbed 15.0% this year. Natural gas prices ended pit trade up 1.6% to $4.41 per MMBtu today, but down 20.7% for the year. As for precious metals, gold prices gained 1.1% to settle at $1421.95 per ounce. Gold futures prices climbed 29.6% this year and set a record high of $1431.10 per ounce in the continuous contract during the process. Silver settled the session with a 1.4% gain at $30.95 per ounce, which helped drive an 83.7% surge for the year. Just yesterday silver prices set a 30-year high of $30.90 per ounce in the continuous contract.

Treasuries put together a strong performance before closing early. The yield on the benchmark 10-year Note moved back below 3.30% for the first time this week.

Though the final trading day of the year marked a convenient time to put the stock market's moves into perspective, there weren't many traders around to read about it. Share volume on the NYSE came in just below 600 million, which is actually up from the past couple of sessions, but still well below the 1 billion shares that had been averaged each session at the beginning of the month. Participation is expected to pick up with the new year, though, since many traders will return from vacations and investors will be more willing to take on new positions in a fresh tax year.

With that, I want to wish everyone a happy, healthy, and prosperous New Year!!


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