US stocks rally on final day of 2008

Dismal year ends on a positive note without any major catalyst

US market managed to end substantially higher for second consecutive day on Wednesday, 31 December, 2008 and thus end a disaster year with a smile. Trading volume remained relatively light due to the ongoing holiday mood in the market. There was no major economic news in the market today. Crude prices traded lower for the entire day but just shot up late in the session and closed higher by more than $5.

On Wall Street, the Dow Jones industrial average ended higher by 108 points at 8,776, the Nasdaq closed higher by 26 points at 1,577.9 and the S&P 500 closed higher by 12 points at 903.

Twenty-five of thirty Dow stocks ended in the green today led by Boeing and Alcoa. All ten sectors ended in the green led by financials and industrials.

2008 was the worst year for US market since 1937. For the year, the Dow industrials slumped nearly 34%, the S&P 500 has lost 38%, and the Nasdaq Composite was off almost 41%. The financial crisis that began with the subprime mortgage collapse in 2007 evolved escalated in 2008. The collapse of the subprime market spread to the rest of the mortgage market and the vicious cycle led to a great impact in Wall Street. The financial sector just plunged this year.

GM continued to provide good boost to the Dow today after the partly-owned financing arm of Dow component General Motors, GMAC, said yesterday that it is receiving $5 billion worth of senior preferred equity from the U.S. Treasury. Meanwhile, General Motors is receiving a loan of up to $1 billion to participate in GMAC's rights offering. As per GM, it will restart auto financing for more U.S. customers because it has better access to funding after converting GMAC to a bank-holding company. GM shares have plunged 87% this year.

Among major economic reports for the day, better-than-expected weekly jobless claims report cheered investors a bit. Claims for the week ending 27 December, 2008 totaled 492,000, down 94,000 from the prior week.

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.

On Wednesday, crude-oil futures surged 14% after Russia threatened to cut natural gas supplies to Ukraine, a move that could impact much of Europe. Despite the late rally, crude futures ended the year with their biggest loss ever. Crude for February delivery rose $5.57 to end at $44.60 a barrel on the New York Mercantile Exchange. The contract dropped as low as $36.94 earlier in the session. On a yearly basis, crude prices dropped more than 60% this year.

US Market will be closed tomorrow, 1 January, 2009, due to New Year's Day.