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Major US Stock Indexes Waver on Final Day of Tumultuous Year

(Associated Press) U.S. stocks wavered between small gains and losses in early afternoon trading Thursday, hovering near record highs as investors close the book on a tumultuous year.

The S&P 500 was mostly unchanged and remains close to the record high it set on Monday. The Dow Jones Industrial Average, which set an all-time high Wednesday, was down 2 points, or less than 0.1%, to 30,405 as of 12:53 p.m. Eastern. The Nasdaq composite slipped 0.2%.

Banks and communications companies held up well in muted trading. Netflix Inc. rose 2.6% and Google’s parent, Alphabet, rose 0.6%. A mix of retail and travel-related stocks fell the most. American Airlines fell 2.2%

Markets were mostly quiet early into the final day of trading for the year. Several overseas markets were closed for holidays, and U.S. markets will be closed for New Years Day on Friday.

Major indexes are all on track to close the year with solid gains. The benchmark S&P 500 is poised for a gain of more than 15%, or more than 17% with dividends included. The technology-heavy Nasdaq could close the year with a gain of more than 40%.

The virus pandemic shocked markets early in the year. The S&P 500 fell 8.4% in February, then plunged 12.5% in March as the pandemic essentially froze the global economy. Businesses shut down in the face of the virus threat and tighter government restrictions. People shifted to working, shopping and doing pretty much everything else from home.

The dire economic situation weighed heavily on almost any company that relied on direct consumer spending or a physical presence, including airlines, restaurants, hotels and mall-based retailers.

Wall Street didn’t stay down for long though, thanks in large part to unprecedented actions from the Federal Reserve and Congress to support the economy. Investors flocked to big technology companies such as Apple and Amazon and smaller companies like Grubhub and Etsy that were poised to take advantage of the shift to working and shopping from home.

“We came into the year expecting slow growth and it turned out to be the fastest bear market recovery in history,” said Sunitha Thomas, national portfolio advisor at Northern Trust Wealth Management.

The S&P 500 jumped 12.7% in April. From there, markets disconnected from the rest of the still-reeling economy and pushed higher in fits and starts as vaccine development progressed and analysts and economists looked ahead to the eventual end of the pandemic.

Thomas said the massive Federal Reserve actions early in the pandemic helped shore up the markets and many companies had learned their lesson from the financial crisis in 2008 and started immediately cutting costs.

The end of the virus and its pummeling of the economy seems even closer now that vaccine approval and distribution is ramping up. The U.S. and U.K. have both approved Pfizer’s COVID-19 vaccine and Britain recently approved another vaccine from AstraZeneca and Oxford University. Meanwhile, the U.S. government has approved another round of aid for businesses and people dealing with another surge in the virus and tighter restrictions on businesses.

Thomas expects pent-up demand and high savings rates to help drive an economic recovery in 2021. Many of the more beaten-down stocks will benefit from a “vaccine-shaped” recovery as the number of vaccines on the market increases and distribution widens.

“We have more visibility that by midyear we start to be able to reopen the economy,” she said.

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