The stock market has closed out a remarkable 2009 with a loss as investors bet the improving economy will lead the government to pull back on its stimulus measures. But stocks still managed their best year since 2003 as they recovered from the financial crisis and recession.
Thursday's trading, which came on extremely light pre-holiday volume, was a fitting end to a tumultuous year.
Stocks fell to 12-year lows by early March on investors' increasing pessimism, then rallied on growing signs of recovery in what turned out to be Wall Street's biggest comeback since the Great Depression. In the last day of the year, more signs of healing first pleased investors, then had them concerned about the economy's ability to thrive without government help.
The thin volume exaggerated the market's moves. The Dow Jones industrial average fell 120.46, or 1.1 percent, to 10,428.05. For the year, the Dow rose 1,651.66, or 18.8 percent.
The broader Standard & Poor's 500 index, considered by professionals to be the market's best barometer, fell 11.32, or 1 percent, to 1,115.10.
The S&P ended the year with a gain of 211.85, or 23.5 percent.
Meanwhile, the Nasdaq composite index fell 22.13, or 1 percent, to 2,269.15. Powered by the recovery in high-tech stocks, the Nasdaq ended 2009 with a gain of 696.12, or 43.9 percent.
The full-year stats are dwarfed by the indexes' recovery from the depths of last March, when they hit bottom. The Dow rose 3,881.00, or 59.3 percent from its March 9 close, while the S&P 500 rose 438.57, or 64.8 percent, and the Nasdaq regained 1,000.51, or 78.9 percent.
News that weekly unemployment claims fell to the lowest level since July 2008 gave stocks an initial blip Thursday, but the market gave back the gains as traders took some profits to close out their books.
Many investors believe the stock market has seen the best of its gains for a while. So many of those working Thursday were moving money out of some stocks.
"Everyone is looking to put a ribbon on the year and wrap things up," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Ablin said investors will be looking at upcoming corporate profit reports and jobs numbers to determine whether the market can hold its huge gains in 2010.
"I have a certain belief that the market can keep going, albeit at kind of a shallower pace, but that's going to require some help from corporate America and the economy itself," he said.