Stocks staged a modest rally Wednesday, the final session of 2008, as some staked out fresh positions in battered financial shares and most took stock of the worst year for the U.S. market since 1937.
"Good riddance to 2008," said Kim Rupert, analyst at Action Economics.
For the year, the Dow Jones Industrial Average has slumped nearly 34%, its worst year since 1931, right in the midst of the Great Depression. The S&P 500 index, widely considered as the most representative of the market gauges for tracking U.S. stocks, has lost more than 38%, its worst year since 1937. The Nasdaq Composite is off more than 40%.
More than $5 trillion in wealth vanished out of the S&P alone.
But in the final month of the year, the market has been reclaiming a bit of ground, with the Dow moving up 0.6%, the S&P adding 0.8%, and the Nasdaq gaining 2.7%.
On Wednesday, the Dow industrials advanced 108 points, or 1.2%, to finish at 8,776, with 25 of its 30 components ending higher.
Leading gains among blue chips, shares of aluminum giant Alcoa Inc. rose more than 5% and shares of Boeing Co. added more than 3%.
"What we may be seeing is some early buying of prospective bottom-fishing candidates," said Marc Pado, market strategist at Cantor Fitzgerald, referring to the practice of attempting to buy beaten-down shares at their lowest point.
However, "it doesn't take a lot to move stocks around in this environment," Pado said. Markets are closed Thursday in observance of New Year's Day.
The S&P 500 rose 12 points, or 1.4%, to end at 903, and the Nasdaq Composite gained 26 points, or 1.7%, to 1,577.
Trading volume picked up in the final hours of trade, with 1.3 billion shares changing hands on the New York Stock Exchange and 606 million shares trading on the Nasdaq. Advancing issues topped decliners by more than 5 to 1 on the NYSE and by more than 3 to 1 on Nasdaq.
By sectors, financials and industrials led among the gainers, rising 3.4% and 2.5% respectively, followed by consumer discretionary and materials, both up about 2.4%.
The heavily influential financials sector was mostly responsible for this year's staggering losses in the market.The Financial Select Sector SPDR exchange-traded fund has slumped nearly 60% this year, as the financial-services sector was hammered by a housing crisis that almost brought the U.S. banking system to its knees. Late Tuesday, the Federal Reserve said it will begin buying mortgage securities backed by Fannie Mae (FRE:and Ginnie Mae in early January.
