NEW YORK – Stocks fell on Monday, a fitting end to the stock market's worst year in more than a quarter century.
Money managers closed the books on a year marked by economic recession, shrinking interest rates, dwindling corporate profits, Wall Street job losses, and the Sept. 11 attacks that devastated the heart of New York's financial district.
"The personal tragedy for so many people on Wall Street makes everyone happy to put the year behind them," said Rick Meckler, president of investment firm LibertyView, which oversees $1 billion. "You combine that with what's been weak markets, and I don't think there are many portfolio managers who will miss 2001.
The Standard & Poor's 500, a broad gauge of the U.S. stock market, ended 2001 with a loss of about 13 percent, its worst annual performance since 1974, when it dropped nearly 30 percent. The index finished the year far from the lofty highs it reached two years ago — down nearly 25 percent from its record closing high of 1,527.5 struck on March 24, 2000.
Glimmers of hope for better days ahead, however, have helped the market recover from the sharp plunge it took in late September, as investors bet an economic rebound will arrive sometime next year. The S&P has risen 19 percent from the 3-year low it struck on Sept. 21.
"Most investors are looking forward to a better 2002," said Peter Gottlieb, a portfolio manager at First Albany Asset Management. "Hopefully, the Fed's 11 rate cuts will start taking hold and the economy will start gaining steam in the first and second quarters of next year."
The blue-chip Dow Jones industrial average lost 115.49 points, or 1.14 percent, to 10,021.50, closing above the psychologically key 10,000 level. The technology-laced Nasdaq Composite Index fell 36.86 points, or 1.85 percent, to 1,950.40. The broad Standard & Poor's 500 Index closed down 12.94 points, or 1.11 percent, at 1,148.08.
"We had nice strength last week, and I think a lot of players were out today ... there was just no catalyst to push it any higher," said Peter Coolidge, senior equity trader at Brean Murray & Co.
Volume was moderate as many Wall Streeters took the day off — about 954 million shares changed hands on the Big Board and 1.4 billion on Nasdaq.
The stock market will be closed on Tuesday, Jan. 1, in observance of New Year's Day, and trading is scheduled to begin again on Wednesday, Jan. 2.
ImClone Systems Inc. was among the day's biggest percentage losers on the Nasdaq, sinking nearly 16 percent after warning of a delay in its potential blockbuster drug.
Some airline stocks got an early boost after America West Airlines became the first carrier granted loan guarantees under the government's $15 billion industry bailout package.
The Nasdaq fell about 21 percent and the Dow dropped 7.1 percent this year as the economy tumbled into recession, while mounting job losses and sagging corporate profits weighed on investor sentiment. Stocks wrapped up their second straight year of declines, the first back-to-back declines since 1973 and 1974.
"People are glad to put this year behind them," said John Forelli, senior vice president at Independence Investment LLC, which oversees about $20 billion. "Thank God we had a strong fourth quarter, because at the end of the third quarter, sentiment among money managers was about as low as I have seen it in 10 to 12 years in the business."
Hopes for an economic recovery in 2002, however, have pulled the market up sharply from its three-year lows on Sept. 21 — the Nasdaq is up 37 percent — following the attacks on the United States that toppled New York's World Trade Center and left the world's financial district in ruins.
"It's obvious that the market's climb since September speaks to a fundamental optimism, but people will be glad to see the year go," said Milton Ezrati, senior economic strategist at Lord Abbett & Co., which oversees $41 billion. "It was a difficult year."
About two hours ahead of the close, floor brokers and traders gathered on the floor of the New York Stock Exchange to sing "God Bless America."
Mayor Rudy Giuliani, who is in the final days of his eight-year term as the mayor of New York City, rang the final closing bell of the year at the world's No. 1 stock exchange.
The NYSE, located just blocks away from the site of the crumpled World Trade Center, made a defiant return in mid-September from a four-day shutdown prompted by the attacks on New York and Washington that left some 3,000 people dead.
Nvidia Corp., which makes the microchip in Microsoft Corp.'s Xbox game console, emerged as the big winner of 2001 — surging more than 300 percent. Office supply chain Office Depot Inc. surged about 160 percent, while auto parts retailer Auto Zone Inc. rallied more than 150 percent.
Providian Financial Corp. ranked as the S&P 500's biggest loser, slid 93 percent in 2001, as the credit card company got whacked by the slowing economy. Handheld computer maker Palm Inc. and US Airways suffered drops of more than 85 percent for the year.
Biotechnology company Imclone grabbed the spotlight on Monday, tumbling $8.79 to $46.46. The company said it expects the launch of its experimental colon cancer treatment, Erbitux, to be delayed until at least the third quarter of 2002 after questions by U.S. regulators over the drug's clinical data.
The drug was to be co-marketed by Bristol-Myers Squibb Co. to patients who had failed to respond to previous chemotherapy treatments. Bristol-Myers fell 80 cents to $51.
Database software maker Oracle Corp. slipped 25 cents to $13.81. On Friday, after regular trading ended, the company said it would cut between 400 and 800 jobs, mainly its North American consulting and sales operations.
America West Airlines gained $1.03, or more than 41 percent, to $3.50. The Bush administration granted $380 million in loan guarantees to America West as part of a $15 billion industry bailout, but asked for a 33 percent stake in the airline as a condition for approval to reflect the risk involved.
US Airways Group climbed 74 cents to $6.34 as investors saw approval in federal loan guarantees to America West as paving the way for other carriers to get government assistance. Alongside America West, some Wall Street analysts consider US Airways one of the carriers most threatened by the risk of bankruptcy after the Sept. 11 attacks.