U.S. stocks fell broadly on the last trading day of an otherwise great year for equities as a better-than-estimated report on initial jobless claims stoked investors’ concern that the Federal Reserve would soon begin winding up stimulus measures.
The Dow Jones industrial average lost 120.46 points, or 1.1%, to 10,428.05 as 29 of its 30 components ended in the red in a thinly traded session. The broader S&P 500 index slid more than 11 points, or 1%, to 1,115.1 points, narrowing its 2009 gain to 23%. The tech-laden Nasdaq closed down 22.13 points, or about 1%, at 2,269.15.
This morning’s stock futures suggest Wall Street is headed for a higher opening on 2010’s first trading day. Dow Jones industrial average futures are up 58 points, or 0.6%, to 10,423. Standard & Poor’s 500 index futures are up 6.60 points, or 0.6%, to 1,117.30, while Nasdaq 100 index futures are up 21.75, or 1.2%, to 1,880.50.
During the year, the S&P 500 gained 23.4%, fed by recovery hopes. The DJIA finished the year up 18.8%, or 1652 points, for its best run since 2003, led by a flamboyant 118.4% jump over the year in American Express (NYSE:AXP), a 56.8% surge in Microsoft (NASDAQ:MSFT), and a 55.5% gain in IBM (NYSE:IBM). Nasdaq, helped by strength in its technology components, jumped 44% and recorded a 6.9% fourth-quarter gain. Technology stocks were the leading gainers among the S&P 500 industry sectors, surging 60% as a group, followed by a 45% rise in raw-materials producers and an almost 40% surge in consumer-related companies.
The upcoming week witnesses increased activity on the Fed front, with the Wednesday FOMC minutes commanding the most attention. Yesterday Lockhart, Kohn and Bernanke took to the podium; today Lockhart and Duke are slated to speak; on Tuesday Hoenig would take to the podium; Bullard is slated on Friday.
Of note is the recent advance in Treasury yields, as the US government funds the rising deficit. The 10-year yield has climbed about 65 basis points in December to 3.85%, rising to a multi-month high of 3.91% Thursday, as investors grew concerned that Fed would slowly raise interest rate due to the improved economic data, which in turn engendered less safe-haven buying.
