NEW YORK – Surging oil prices, a falling dollar, triumphant IPOs and megamergers: 2004 was a year that brought gossip, suspense and greed back to the forefront, after three years of glum market news. Here's a selection of the year's biggest stories:
After hitting bottom in the late 1990s, crude prices have surfed on a wave of output shortages and international tension, jumping to a record $55 in October and gaining 30 percent overall. Prices have since come down by about 25 percent, partly because the North American winter has been relatively mild.
But the retreat may prove only temporary since worldwide demand for fuel continues to skyrocket. Global consumption is now at more than 80 million barrels a day and is only likely to rise, as China's and India's economies continue to grow.
At home, Americans are paying an average $2 a gallon for gasoline, while oil companies have posted record profits, with Exxon Mobil's earnings rising 24 percent for the year.
The greenback has fallen about 12 percent since September against the euro, continuing its three-year decline against its European rival. Remember when a dollar bought you 1.2 euros? Now you need more than $1.30 to buy that same euro.
The U.S. currency keeps plumbing new depths against the Japanese yen, too, and traders say it could decline to 100 yen within the next few weeks.
The Bush administration seems to be in no hurry to stop the dollar's spectacular descent. A low dollar may help with exports and the country's ballooning trade deficit, but it also raises the price of imported goods and steers international investors away from U.S. stocks.
In the telecommunications sector, the Cingular-AT&T union (for $41 billion) and the Sprint-Nextel deal ($35 billion) will combine yet two more wireless giants and cause even more confusion when choosing a carrier. In the software world, Oracle-PeopleSoft ($10.3 billion) and Symantec-Veritas ($13.5 billion) were the wedding notices of the year. Total weight of the four mergers: $100 billion.
Also, Kmart and Sears announced in November they were merging — a union of two troubled retailers that has raised quite a few eyebrows on Wall Street.
New York Attorney General Eliot Spitzer sued Marsh & McLennan Cos. (MMC) and attacked American International Group (AIG), among others. The companies are accused of taking payoffs from insurance companies to steer corporate clients their way rather than act in the best interest of said clients. Spitzer also got plenty of notice when he took on former New York Stock Exchange Chairman Dick Grasso over his outrage-inducing $187 million compensation package.
After much prodding from regulators, mortgage giant Fannie Mae (FNM) is just starting to come clean on its "accounting problems," which will wipe out some $9 billion in earnings. Some analysts say the real damage may be closer to $15 billion. Fannie Mae CEO Franklin Raines was thrown out — with a compensation package worth $19 million in cash and stock plus a modest lifetime monthly pension of $114,000.
A very public shareholder rebellion forced Disney's (DIS) CEO to give up his chairman title and, more importantly, to promise to step down in 2006. (''I'm going to Disneyland!'' Eisner wrote in the letter announcing his planned retirement.)
When he wasn't ducking attacks from shareholders Roy Disney and Stanley Gold, Eisner spent his time in a Delaware courtroom with former Disney exec Michael Ovitz, trying to justify a $140 million pay package for his former "friend" for just 14 months of employment.
After a mediocre first half following a strong 2003, stocks picked up speed in the weeks preceding the presidential election and have made regular progress ever since. The Dow Jones industrial average gained 3.5 percent in 2004, while the Nasdaq composite rose 8 percent and the S&P 500 index rose 9 percent. Analysts say the stock surge is likely to carry over into 2005.
Despite widespread skepticism from those who still remember the dot-com bust of 2000, Google (GOOG) went ahead with its IPO, which was marred by a series of embarrassing glitches. Since it started trading, however, the stock has climbed to heights that have surprised even the most bullish analysts.
Google's market value stands at $44 billion just six years after the company's inception, and former Stanford roommates Larry Page and Sergey Brin are now worth roughly $6 billion apiece.
Obesity was again a major public health concern, and this year companies got to work. McDonald's (MCD) got rid of its super-sized fries and drinks and notched hefty profits by boosting its salad menu.
Cereal titan General Mills (GIS) decided to make all of its cereal brands exclusively whole grain. The company also reduced sugar content in three of its brands by 75 percent. Rival Kellogg's (K) plans to reduce sugar content in its Froot Loops cereal.
Of course, not every fast food company is following the low-fat line. Hardee's (CKR) launched the Monster Thickburger, a 1,420-calorie behemoth consisting of two 1/3-pound slabs of Angus beef, four strips of bacon, three slices of cheese and mayonnaise on a buttered sesame seed bun. The company got worldwide exposure for the product, which packs 107 grams of fat, and has seen the whole Thickburger family of sandwiches become its cash cow.
Drug Stocks in the ER
Pharmaceutical stocks have come under increasing scrutiny as the safety of some blockbuster drugs have been called into question. In September, Merck & Co (MRK) withdrew its arthritis drug Vioxx after a study showed patients taking it for 18 months had doubled the risk of heart incidents.
Another major surprise hit the market when Pfizer Inc. (PFE) said that a study found an increased risk of heart attacks for patients taking high dosages of its top-selling arthritis pain reliever Celebrex. While the company plans to continue to sell Celebrex, the Food and Drug Administration says it is considering warning labels for the drug or withdrawing it from the market. Meanwhile, AstraZeneca PLC (AZN) said that its lung cancer drug Iressa failed to prolong survival when compared with a sugar pill.
With estimates pinning potential legal costs as high as $18 billion, Merck's stock has fallen about 30 percent since its September bombshell. Pfizer shares have tumbled about 7 percent and AstraZeneca stock has fallen about 10 percent.