US stocks up in final session of the year

Wall Street saw a merciful end to a dreadful year today as stocks closed the last session of 2008 with a sizeable advance.

The Dow Jones industrials rose 108.00 points to 8,776.39 – but plunged nearly 34% over the course of the year as the US mortgage and credit crisis turned into a global recession.

The past year marked the worst for the Dow since 1931.

Investors took some comfort from the Labour Department’s report of a sharp drop in weekly unemployment claims. But many traders were out of the market, on holiday or having closed their books for the year.

Analysts said many investors were looking forward to the start of 2009. But there are many unknowns about the US economy that could make Wall Street’s recovery from a terrible 2008 a difficult one.

“The tone is less onerous for stocks,” said Steven Goldman, chief market strategist of Weeden & Co in Greenwich, Connecticut. He said lighter volume and relief that the year was over probably helped the market’s advance.

Wall Street’s statistics for 2008 are evidence of how stunningly terrible the year was:

:: The Dow lost 33.8% for the year and was down 38% from its record close of 14,165.53 in October 2007, making it the Dow’s worst year since 1931, when the US was deep into the Depression;

:: The Standard & Poor’s 500 index, the indicator most watched by market pros, lost 38.5% in 2008 and is down 44.8% from its 2007 high of 1,565.15. The S&P 500’s 52% decline at its November low was the worst since an earlier version of the index lost 54.5% from March 1937 to March 1938.

Today, the S&P 500 rose 12.61, or 1.42%, to close at 903.25.

The Nasdaq composite index fell 40.5% in 2008 and ended the year off 44.8% from its most recent high in October 2007. The tech-heavy index peaked at 5,048.62 during the dot-com bubble at the start of the decade.

The Nasdaq rose 26.33, or 1.70%, today to close at 1,577.03.