2002 Ends Mixed as Markets Register Third Year of Declines
The Dow finishes down 16.8% and the S&P 500 drops 23.4% on uncertaintiesBy Martin Zimmerman
Times Staff Writer
January 1 2003
Wall Street closed out 2002 much like it began -- mired in a bear market that currently shows few signs of abating.
On the last trading day of the year, investors on Tuesday bid good riddance to a year marked by accounting scandals, a lackluster economy, paltry corporate profits and steep declines in stock prices.
"It's been a lousy year," said Todd Leone, head of listed trading at S.G. Cowen in New York.
How lousy? Consider these facts:
The Dow Jones industrial average and the Standard & Poor's 500 index both notched their third straight losing year for the first time since 1939-41. And Nasdaq marked the first three-year losing streak in its 30-year history.
The Dow was down 16.8% for the year, its worst showing since 1977. The S&P 500's 23.4% loss was the worst for the index since 1974.
Of the Dow's 30 members, only Eastman Kodak, Procter & Gamble and 3M gained in 2002. Kodak rose 19%. Home Depot, the index's biggest laggard, fell 53%.
Every S&P 500 industry sector lost ground last year -- the first time that has happened since at least 1981, when S&P began tracking the data.
The Wilshire 5000 total market index, compiled by Santa Monica-based Wilshire Associates, lost 22.2% for the year, or about $2.8 trillion in market value. Since peaking on March 24, 2000, the Wilshire 5000 has fallen 43.4% as $7.4 trillion in investors' money evaporated.
The market, which tumbled through the first three quarters of the year as accounting scandals engulfed the likes of WorldCom Inc. and Global Crossing Ltd., seemed poised for a rebound after bouncing off multiyear lows in mid-October. But stocks stumbled badly in December as escalating tensions with Iraq and North Korea and an uncertain outlook for the U.S. economy unnerved investors. The S&P 500 fell 6% for the month -- the worst December since 1931.
On Tuesday, investors appeared anxious just to get the year over with.
The Dow industrials eked out a gain of 8.78 points, or 0.1%, to end the year at 8,341.63. The S&P 500 gained a fraction of a point, or 0.1%, to 879.82, while the technology-heavy Nasdaq composite slipped 4.03 points, or 0.3%, to 1,335.51.
Advancers outnumbered decliners by about 2 to 1 on the New York Stock Exchange and by 10 to 7 on Nasdaq. Volume was very light, with many traders away from their desks for the holidays. Financial markets in the U.S. and most other countries will be closed today for New Year's.
Stocks fell early in the session after the Conference Board unexpectedly reported that its consumer confidence index fell to 80.3 in December from a revised 84.9 in November. The reading was just above a nine-year low of 79.6 in October.
Stocks rebounded as crude oil had its first back-to-back decline in seven weeks, easing concerns about the effect of high energy prices on consumer and business spending. Crude for February delivery fell 17 cents to $31.20 in New York, bringing its two-day drop to 4.7%. Some investors speculated OPEC will raise production to make up for a shortfall from Venezuela.
Meanwhile, gold prices rose again Tuesday, nearing their recent 5 1/2-year high, while the dollar fell again against the euro as investors fretted about a possible war in the Middle East.
"We're certainly entering the new year with a lot of trepidation, with respect to all kinds of different international scenarios," said John Carey of Pioneer Investment Management.
In other highlights Tuesday:
Major European markets managed modest rallies as they ended a year in which they performed as badly as their U.S. counterparts -- or worse in the case of Germany's DAX index, which lost 43.9% during 2002. On Tuesday, key indexes rose 1% in Great Britain, 1.3% in France and 1.9% in Germany.
The S&P aerospace index, which includes Boeing, United Technologies and General Dynamics, rose 1.5% as investors bet defense contractors will see more business if the U.S. goes to war.
Tyco rallied $1.73 to $17.08. The company, which has three former executives under indictment, said an internal review found no accounting errors that affect the current year's results.
Kerr-McGee slid $1.45 to $44.30. The fourth-largest independent oil and gas producer in the U.S. said write downs of assets in the North Sea and the Gulf of Mexico will reduce fourth-quarter profit by $385 million.
Reuters and Bloomberg News were used in compiling this report.
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