Wall Street has had a merciful end to a dreadful year as stocks closed the last session of 2008 with a moderate advance. The Dow Jones industrials are up 109 points at 8,778 — but have plunged nearly 34 percent over the course of the year.
Investors took some comfort Wednesday from the Labor Department's report of a sharp drop in weekly unemployment claims. But many traders were out of the market, on vacation or having closed their books for the year.
Analysts said many investors were looking forward to the start of 2009. Still, there are many unknowns about the economy that could make Wall Street's recovery from a terrible 2008 a difficult one.
Trading proceeded quietly because many investors have closed their books on the year. The Dow is down 35 percent for 2008, while broader indexes are down about 40 percent. It marks the worst year for the Dow since 1931. Wall Street is hoping the economy will rebound in the second half of 2009.
The market was heartened by a government report that initial applications for unemployment benefits fell by 94,000 to 492,000 for the week ending Dec. 27. The drop, which partly reflects seasonal adjustment difficulties tied to the Christmas holiday, was greater than analysts had expected. But the number of people still claiming benefits has climbed to the highest level since 1982.
Wednesday's gains couldn't erase the enormous losses of the past 12 months but some investors were nonetheless able to hold or add to the sizable gains made Tuesday when financial shares led stocks higher.
"The tone is less onerous for stocks," said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Conn. He said lighter volume and relief that the year is over is likely aiding the market's advance.
"There's maybe a little bit of optimism," he said. "We all start the track record over again."