S&P 500 Misses 2011 Gain by a Hair; Dow Rises 5.5% on Year

NEW YORK (TheStreet) -- Stocks edged lower on the slow last trading session before the New Year as the S&P 500 failed to eke out a gain in 2011, ending the year just 0.04 point in negative territory.

The Dow Jones Industrial Average fell 69 points, or 0.6%, to 12,217.56. IBM (IBM), Intel (INTC) and Boeing (BA) led declines in the Dow as 21 of its 30 components fell. The index finished the year solidly up 5.5%.

The S&P 500 declined 5.4 points, or 0.4%, to 1,257.60. Meanwhile, the Nasdaq erased 8.6 points, or 0.3%, at 2,605.15 to become the only U.S. index to take a loss for the year. The Nasdaq ended 2011 down 1.8%.

The S&P 500 Utilities Index led the benchmark index's 10 industry groups in gains for the year, advancing 15%. Consumer staples and health care shares were also among the top performers.

However, the roller coaster ride of the European debt crisis ensured that banks would be the year's worst performer. The S&P 500 Financial Index erased 18% in 2011 as investors worried about debt contagion and the risk of European governments defaulting on their bonds. Concern about global economic stability also sent the materials sector plunging 12% for the year.

Reflecting the sector performers, Bank of America (BAC) led declines in the Dow for 2011, slipping a remarkable 58%. Between investor concern about the bank's capital, national backlash at an attempt to institute a $5 monthly debit fee and losing the title as the largest U.S. bank by assets to JPMorgan after the third quarter, Bank of America had a tough year.

Alcoa (AA) fell the second most in the blue-chip index, losing 44%, as global concern about recession in Europe and a slowdown in China end base-materials tumbling.

On the opposite end of the spectrum, McDonald's (MCD) earned became the Dow's largest gainer. The world's largest fast-food chain surged 31% in 2011 as it managed to do the remarkable and see strong growth in France and Germany. IBM (IBM) and Pfizer (PFE) were also strong performers, advancing 25% and 24%, respectively, for the year.

With no major U.S. economic releases expected today, investors anticipated a quiet last session and many money managers had already checked out, having closed their books for the year. Markets will remain closed on Monday, Jan. 2 in observance of the New Year's holiday for a second consecutive shortened trading week.

"Today's action is unsurprisingly tepid as market players dink around with small trades to close the book on 2011," said RealMoney contributor James "Rev Shark" Deporre. "There is little edge, and there won't be until things pick up again next week.

Germany's DAX climbed 1.34% while London's FTSE finished up 0.1% in the last half session of trading in Europe. Overnight, Japan's Nikkei Average settled 0.67% higher and Hong Kong's Hang Seng was up 0.2%.

Worry over an expanding Spanish budget deficit helped push stocks down this morning when the European country announced the deficit will be more than forecast in 2011.

"We have found a deficit figure which is much higher than what the former government had targeted," government spokeswoman Soraya Saenz de Santamaria said in Madrid.

The budget deficit will grow to 8% of gross domestic product, while the government previously forecast the number at just 6%.

2012 Stock Predictions and Outlook

Your one-stop shop for 2012 stock recommendations and market predictions.

Lukewarm economic data and declines in Italian bond interest rates helped stocks resume the Santa Claus rally on Thursday. However, there has been little buying and selling conviction as trading grinds to a slow.

"There's not a great deal to take away from the last few weeks. The price action doesn't have much action behind it. It's been low liquidity," said Ian Lyngen, bond strategist with CRT Group. The next major trading event investors are anticipating is next Friday's nonfarm payroll report.

In corporate news, Sears Holdings (SHLD) had another ugly session on Friday after Fitch Ratings cut its long-term credit rating on the struggling retailer to 'CCC' from 'B' and kept its outlook negative. The downgrade followed news on Tuesday that Sears plans to close up to 120 of its stores following a dismal holiday selling season. Shares slipped 3.4% to $31.78, extending the struggling retailer's annual decline to 57%.

The New York Stock Exchange is grounding shares of AMR (AMR), the parent company of American Airlines. The Big Board is suspending trading in the company's common stock and certain debt issues as of Jan. 5 with plans to begin delisting procedures because the shares aren't meeting the minimum bid requirement. The carrier, which sought bankruptcy protection in late November, expects trading to move to the Pink Sheets following the delisting. AMR, down 96% in 2011, fell 32% to 35 cents a share Friday.

Morton's Restaurant Group (MRT) was also in the spotlight as investor Tilman J. Fertitta announced the commencement of its cash tender offer to acquire the steakhouse chain's stock at $6.90 per share. The stock closed Thursday at $6.85. Feritta owns a little less than a 5% stake in the company, according to data from Thomson Reuters. Morton's agreed to be acquired by Feritta on Dec. 16 with an expected closing for the transaction seen in February. The per share consideration represents a premium of more than 30% to the stock's closing price of $5.16 on Dec. 15. On Friday, shares rose 0.4% to $6.88.

Camac Energy (CAK) completed a deal to acquire three offshore oil exploration licenses in West Africa, while Eni will sell its 40% stake in a Nigerian project to Allied Energy, an affiliate of Camac's largest shareholder. The shares surged 15% to $1.01.

Frontier Communications (FTR) advanced after Piper Jaffray rated the shares neutral as it initiated coverage of the phone company. The shares jumped 2.8% to $5.15.

The dollar index fell 0.2%. The benchmark 10-year Treasury gained 7/32 diluting the yield to 1.874%. The bond market closed at 2 p.m.

February oil futures fell 82 cents to $98.83 a barrel as the U.S.-Iranian standoff over access to the Strait of Hormuz, an important oil route, continued to escalate. Thursday night the commander of Iran's navy claimed the country's military had captured footage of a U.S. aircraft carrier near the Strait. The fuel increased 10% for the year.

In other commodities, February gold futures were rising for the first time since Dec. 20 Friday after the metal's drop to its lowest price in six months led to speculation that the steep fall was over-done. The metal settled up $25.90 at $1,565.80 an ounce after it erased 4.6% in the prior seven days of trading. Gold is on track to complete its first quarterly decline in three years today, having lost 4.9% in the last three months.

-- Written by Kaitlyn Kiernan in New York.



>To contact the writer of this article, click here: Kaitlyn Kiernan

To follow the writer on Twitter, go to @Kaitlyn_Kiernan.