Dow Finishes 2010 Up 11%

Stocks finished mixed Friday, but all three major averages closed the year with double-digit gains.
By Melinda Peer ,

NEW YORK (

TheStreet

) -- Stocks finished on a mixed note Friday, closing the books for 2010 with double-digit gains.

The

Dow Jones Industrial Average

rose 9 points, or 0.08%, to close at 11,578. That was short of its highest close for the year of 11,585. The

S&P 500

finished flat at 1,257, while the

Nasdaq Composite

fell 10 points, or 0.4%, at 2,653.

The Dow surged 11% this year, helped by strong corporate earnings, a spike in M&A activity and boosts to dividend payouts. The S&P 500 jumped 13%, while the Nasdaq Composite soared17%.

Commodities outpaced returns from stocks and bonds in 2010 as demand from China, tight supply and loose monetary policy boosted the prices of everything from cotton and silver to copper and corn.

Still, investors across asset classes have reason to cheer this New Year's Eve as stocks, commodities, bonds and the dollar all wrapped the year higher, albeit after a bumpy ride. Investor sentiment in 2010 swung from extreme pessimism following the debt crisis in Greece and the May flash crash in the first half of the year, to soaring confidence as the

Federal Reserve

initiated another round of quantitative easing and economic data and earnings improved.

Ralph Fogel, partner and head of investment strategy at Fogel Neale Partners, said it became more apparent in 2010 that economic uncertainties outside the U.S. could have a significant impact at home.

"There was a cough outside of the United States in Greece," he said, referring to the turmoil in Greece's bond market that triggered broader concerns across the eurozone and pressured global markets. "There haven't been too many times in the past that things have happened outside of the U.S. that still affected the U.S. Usually, we get the cold here and send it out to the rest of the world."

"It also became very apparent this year how big an influence China is in terms of economics and the grab for natural resources, and that will continue. It's a very healthy thing that China is building a middle class but it does put more pressure on resources."

"I think if you had asked anybody at the beginning of the year where the market would have ended up, I'm not sure anyone would have said up by 11% on the Dow and 13% on the S&P," Fogel said. "We keep thinking in terms of what happened two years ago

with the financial crisis that began in late 2008 and it was very dramatic, but we're still two years into the recovery. It may not feel like it with unemployment where it is but we've come a long way from the bottom."

Basic materials and energy stocks saw the strongest gains on Friday with

Alcoa

(AA) - Get Report

topping the Dow.

American Express

(AXP) - Get Report

and

Verizon

(VZ) - Get Report

were other gainers.

Hewlett-Packard

(HPQ) - Get Report

,

Chevron

(CVX) - Get Report

and

Exxon Mobil

(XOM) - Get Report

were among the Dow's worst performers.

Gold prices closed a year of record returns on a high note with the February gold contract rising by $15.50 to settle at $1,421.10 an ounce. The

SPDR Gold Trust

(GLD) - Get Report

was up 1% to $138.50, having risen roughly 29% in 2010.

Energy prices strengthened Friday on a weaker dollar, with the February crude oil contract edging $1.54 higher to settle at $91.38 a barrel. Crude oil futures have risen about 15% in 2010.

The dollar weakened against a basket of currencies with the dollar index down by 0.5%. The benchmark 10-year Treasury note strengthened 21/32, diluting the yield to 3.288%.

.

With no economic releases scheduled for Friday's session, a day before the new year, trading volumes are, expectedly, light. During the trading session, 591 million shares were trading on the New York Stock Exchange while one billion shares changed hands on the Nasdaq.

In corporate news,

CVS Caremark

(CVS) - Get Report

entered into an agreement to acquire the Medicare Part D business of

Universal American

(UAM)

for $1.25 billion, more than doubling the size of CVS's Medicare Part D program. CVS's stock was down 0.6% to $34.77 while Universal American's stock was up 40% to $20.45.

Shares of bookseller

Borders

( BGP) shed 22% to 90 cents on its late Thursday confirmation that it's

delaying payments to some of its vendors while it works to refinance its debt.

Pacific Management Company

, or PIMCO, as it's more commonly known, is

paying $92 million to settle a class-action lawsuit that accuses it of manipulating the price of 10-year Treasury securities in 2005.

Jackson Hewitt Tax Service

( JTX)plans to operate in more than 2,000

Wal-Mart

(WMT) - Get Report

stores in the coming tax season, expanding its presence by 10% from last year's level. Jackson Hewitt's stock fell 4.4% to $2.17.

Shares of

Clearwire

(CLWR)

were down 1.3% to $5.15 on news that its chairman Craig McCaw was stepping down. Shares of

Sprint Nextel

(S) - Get Report

, which owns a majority stake in the company, were adding 1.6% to $4.23.

Shares of

Imax

(IMAX) - Get Report

,

Anadarko Petroleum

(APC) - Get Report

and Verizon were among the stocks hitting new 52-week highs on the final trading day.

Hong Kong's Hang Seng jumped 1.8% and closed the year with a 5.3% gain. Japan's Nikkei was closed. The FTSE finished down by 1.2%, ending the year with a gain of 9%. German markets were closed.

--Written by Melinda Peer and Shanthi Bharatwaj in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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