2013 a Year to Remember for Stocks

McClatchy Washington BureauDecember 31, 2013 

APTOPIX Wall Street

A trader wears glasses celebrating the new year while working on the floor at the New York Stock Exchange in New York


— Aided by the Federal Reserve's bond buying to stimulate risk taking and broader economic recovery, stocks closed 2013 on a tear, posting their best performance in almost two decades.

The Dow Jones industrial average finished the year at 16,576.66, up about 27 percent from where it was Dec. 31, 2012 when the Dow stood at 12,883.52. That's the best year since 1995 and the fifth straight year of gains for the Dow.

The S&P 500 closed at 1848.36, up 30 percent from 1398.11 a year earlier. And the tech-heavy NASDAQ finished 2013 at 4176.59, sharply above the 2953.52 close a year before.

Can the Bull Market continue in 2014? Most market analysts think it will as the economy is finally showing signs of growing at a stronger pace. Both growth and hiring picked up strongly in the second half of 2013.

The big question for 2014 is what effect will the so-called taper by the Fed hurt stocks. Chairman Ben Bernanke announced in December that starting in January the central bank would slow the pace of its purchases of government and mortgage bonds, tapering off slowly the support it has given through the bond purchases.

Critics of the effort argue it has inflated stock prices, but the Fed is sure to remove the stimulus slowly to ensure a minimum disruption on the economy. Bernanke made clear that his successor, nominee Janet Yellen, is expected to pursue the same policies that he put in place.

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