NEW YORK — If you’d told investors what was going to happen in 2012 — U.S. economic growth at stall speed, an intensifying European debt crisis, a slowdown in China, fiscal deadlock in Washington, decelerating corporate earnings growth — and asked how the stock market would perform, few would have predicted a good year.
But that’s just what they got.
The Dow Jones industrial average, the Standard & Poor’s 500 and the Nasdaq composite index all ended the year substantially higher, despite losing some ground in the final days of year as concerns about the looming “fiscal cliff” mounted.
“There’s been a lot thrown at this market, and it’s proven to be very resilient,” said Gary Flam, a portfolio manager at Bel Air Investment Advisors in California.
“Here we are at the end of the year, and it’s still relatively strong.”
The Dow gained 7 percent for the year, its fourth consecutive annual advance, having started the year at 12,217.
The S&P 500, which started the year at 1,257, is up 13 percent, beating the 7.8 percent average annual gain of the past 20 years. The Nasdaq also logged a better-than-average gain, 16 percent.
Including dividends, the total return on the S&P 500 index was even better: 16 percent.
Some of the best-performing stocks for the year were those that had been hammered in 2011. Homebuilder PulteGroup, appliance maker Whirlpool and Bank of America all more than doubled over the year, after falling by double-digit percentages in 2011.
Some of the worst performers of the year were Best Buy, Hewlett-Packard and J.C. Penney.
All are struggling to keep up with competitors who have adapted more quickly to changing technologies and changing customer tastes. They were all up Monday, but were each down at least 45 percent for the year.
On Monday, the stock market was as choppy as the “fiscal cliff” deal-making that has been yanking it around.
Stocks opened little changed Monday but jerked higher at midday as headlines began to cross that the bare bones of a deal had been worked out, yet still was not approved, to avoid a drastic series of tax increases and government spending cuts set to kick in after a midnight deadline.
At the close of trading, Dow Jones industrial average was up 166.03 points, finishing the year at 13,104.14. The S&P 500 rose 23.76 to 1,426.19. The Nasdaq composite climbed 59.20 to 3,019.51.
With the “fiscal cliff” still closing in, investors’ opinions about its potential impact varied, making its long-term effect on the market hard to guess.
It’s difficult to discern how a deal, or lack of a deal, might affect the stock market.
From mid-November through roughly mid-December, the stock market rose more or less steadily, despite the “fiscal cliff” looming on the horizon. It wasn’t until shortly before Christmas that the “cliff” finally scared investors enough to send the market down.
“We’re having a fragile recovery, with the pain of 2008 still fresh on everybody’s mind,” said Joe Heider, principal at Rehmann Group outside Cleveland. “It’s fear of the unknown. And fear is one of the greatest drivers of the financial markets.”