At end of up-and-down year, stock markets holding steady

Fast-food giant McDonald’s Corp. was the No. 1 Dow stock in 2011, climbing nearly one-third for the year.

NEW YORK -- The stock market ended a tumultuous year right where it started. In the final tally, despite big climbs and falls, unexpected blows and surprising triumphs, all the hullabaloo proved for naught.

On Friday, the broad-based Standard & Poor's 500 index closed at 1,257.60. That's exactly 0.04 point below where it started the year.

"If you fell asleep January 1 and woke up today, you'd think nothing had happened," said Jack Ablin, chief investment officer of Harris Private Bank.

It was a year when U.S. companies were supposed to run out of ways to make big profits. But they didn't, and in fact generated more than ever.

It was a year when the U.S. lost its AAA credit rating, which should have spooked buyers of its bonds. Instead, investors bought more and made Treasurys one of 2011's best bets.

Among stocks, there were some surprising winners. Investors who bought the most conservative and dullest of stocks -- utilities -- gained 15 percent this year, the biggest price rise of the 10 industry sectors in the S&P 500. Other winners were consumer staples, 11 percent, and health care companies, 10 percent.

For stock investors, 2011 wasn't supposed to end this way.

The economy added an average of more than 200,000 jobs a month in February, March and April. And U.S. companies kept reporting big jumps in profits, defying naysayers.

On April 29, the S&P closed at 1,363, double its recessionary low of March 2009.

Then manufacturing slowed, companies stopped hiring and consumer confidence plummeted, taking with it hopes of big stock gains.

Then Japan was rocked by an earthquake and tsunami. That closed factories run by parts suppliers to U.S. firms, in particular auto makers.

After much squabbling, U.S. politicians eventually decided to raise the cap on how much the federal government can borrow in early August.

The debate took its toll. The Dow Jones industrial average swung more than 400 points four days in a row.

Overhanging it all was fear the debt crisis in Greece had spread to Italy and Spain, countries too large for other European nations to bail out.

Talk of another blockbuster year for stocks turned to dark musings about the possibility of another U.S. recession. So stocks kept falling.

On Oct. 3, stocks had dropped 19 percent from their April high, one point shy of an official bear market.

Since then, U.S. housing starts have increased, factories are producing more, unemployment claims fell and U.S. economic growth rose. And companies are still generating impressive profits. Those in the S&P 500 increased profits by double-digit percentages for nine quarters in a row. The good news pushed stocks up in the closing months of 2011.

The biggest winner in the Dow was McDonald's Corp., up 31 percent for the year. Bank of America Corp. was the worst-performing stock, down 58 percent.

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Overall it was a bad year but a great quarter. Despite disappointing returns in 2011, the last three months of the year were impressive, which could bode well for the new year. The S&P 500 rose 11 percent. The Dow climbed 1,344 points, or 12 percent, its largest quarterly point gain in its history.

For the day:

The Dow fell 69.48, or 0.6%, to 12,217.56.

The S&P 500 fell 5.42, or 0.4%, to 1,257.60.

The Nasdaq fell 8.59, or 0.3%, to 2,605.15.

For the year:

The Dow gained 640.05, or 5.5%.

The S&P 500 fell 0.04, or less than 0.01%.

The Nasdaq fell 47.72, or 1.8%.