U.S. Stocks Drop

Dec. 31 (Bloomberg) -- U.S. stocks fell, paring their fifth straight annual advance, after signs of slowing economic growth sent shares of energy companies and miners lower.
Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. led declines in energy and commodity producers, the year's best- performing industries. Amazon.com Inc. and EBay Inc. slipped after holiday Internet sales rose at the slowest pace on record.
The S&P 500 dropped 10.13, or 0.7 percent, to 1,468.36, reducing its yearly gain to 3.5 percent. The Dow Jones Industrial Average lost 101.05, or 0.8 percent, to 13,264.82. The Nasdaq Composite Index declined 22.18, or 0.8 percent, to 2,652.28. Shares in Europe also fell.
Concern that credit market losses will curb bank lending and spur a recession sent the S&P 500 down 3.8 percent in the fourth quarter, leaving it 6.2 percent below its record close on Oct. 9. The retreat was the first for any fourth quarter in seven years.
``I am cautious towards the market,'' John Carey, a Boston- based portfolio manager who helps oversee about $14 billion at Pioneer Investment Management, said in an interview with Bloomberg radio. ``This housing problem and the credit crisis that's related to it are very serious and we are seeing some effects on consumer spending.''
The S&P 500, a benchmark for companies with a median market value of $12.8 billion, has posted gains every year since 2002, advancing 67 percent. The Dow average rose 6.4 percent this year and the Nasdaq Composite Index climbed 9.8 percent, its biggest rally since 2003.
The S&P 500 rose 10 percent in 2007 excluding financials, according to Howard Silverblatt, the firm's senior index analyst.
Quarterly Drop
Some 1.15 billion shares changed hands on the New York Stock Exchange, the most ever on the last day of the year, according to Bloomberg data. Trading was 19 percent less than the three-month average.
Amazon.com, the world's largest Internet retailer, fell $1.81, or 1.9 percent, to $92.64. EBay, the biggest online auctioneer, fell 59 cents, or 1.8 percent, to $33.19.
Exxon, the biggest U.S. energy company, dropped $1.31 to $93.69. Freeport-McMoRan, the world's second-largest copper producer, declined $2.11 to $102.44.
Crude oil for February delivery lost 2 cents to close at $95.98 a barrel in after falling as much as 1.3 percent. Copper and gold futures also declined.
Online spending from Nov. 1 through Dec. 27 increased 19 percent, ComScore Inc. said. Sales growth trailed last year's 26 percent and was the slowest since ComScore began reporting the figures in 2002. A report from Washington-based Mortgage Insurance Companies of America showed the number of insured homeowners more than 60 days late on payments jumped last month.
Record VIX Advance
The Chicago Board Options Exchange Volatility Index, known as the market's ``fear gauge'' because it tends to rise as stocks fall, increased 8.5 percent to 22.50. The so-called VIX climbed 95 percent in 2007, the biggest annual rise in its 18-year history. Higher readings, derived from prices paid for S&P 500 options, indicate traders expect bigger share-price swings.
Delta Petroleum Corp. surged $3.34, or 22 percent, the most in five years, to $18.85. The oil and gas producer that has posted five straight quarterly losses said billionaire Kirk Kerkorian's Tracinda Corp. will buy 35 percent of the company for $684 million. The investment will allow Delta to speed up drilling in the Paradox Basin in Utah and the Piceance basin in Colorado, the company said.
American Express Co. and JPMorgan Chase & Co. led financial companies to a 0.7 percent advance, their first in four days. The sector lost 21 percent of its value this year, the most since falling 24 percent in 1990. American Express, the third-largest credit-card network, rose $1.18, or 2.3 percent, to $52.02. JPMorgan Chase, the third-largest U.S. bank, gained 39 cents, or 0.9 percent, to $43.65.
Homebuilders Rally
Homebuilders in S&P indexes rose 1.3 percent after the pace of houses purchases unexpectedly rose. Existing homes changed hands at an annual rate of 5 million in November, the National Association of Realtors said. Transactions were down 20 percent from November 2006 and the median home price fell 3.3 percent. The sales improvement may be short-lived as stricter lending rules threaten to further depress the industry.
``Some of the better-performing names are flat to down today, and a lot of the downtrodden stocks are having a good day,'' said James W. Gaul, a portfolio manager at Boston Advisors LLC which manages $2.2 billion in Boston. ``I don't know if there is a compelling reason other than it's the last day of the year.''
The best performing stocks and industry groups this year were pushed higher by global demand for commodities and computers, while the worst were dragged down by losses related to the U.S. housing recession.
Year's Best
National-Oilwell Varco Inc., the largest U.S. maker of oilfield equipment, had the biggest rally in the S&P 500, gaining 140 percent. Energy companies climbed 32 percent as a group, the most among 10 industries, as crude oil surged as high as $99.29 a barrel.
Monsanto Co. and Freeport-McMoRan led raw-materials producers to a 20 percent advance. Monsanto, the world's biggest seed producer, rose 113 percent as corn prices surged amid record demand to produce ethanol and animal feed. Freeport McMoRan gained 84 percent.
Technology companies rose 16 percent this year, led by Apple Inc., maker of Macintosh computers and iPod music players, and MEMC Electronic Materials Inc., the world's third-largest manufacturer of silicon wafers. Apple, the fourth-best performer in the S&P 500, rose 133 percent, while MEMC climbed 126 percent.
Financials Plunge
Online bank and broker E*Trade Financial Corp. led the plunge in financial shares after the value of its mortgage- related holdings declined. E*Trade slid 84 percent this year, the worst performance in the S&P 500. Countrywide Financial Corp., the biggest U.S. mortgage lender, fell 79 percent for the index's second-largest decline.
Circuit City Stores Inc. led shares of so-called consumer discretionary companies to a 14 percent drop in 2007. The second- largest U.S. consumer-electronics retailer fell 78 percent after forecasting a loss for the sixth straight quarter. Homebuilders also tumbled as the housing recession continued for a third year. Pulte Homes Inc., the second-biggest U.S. builder, fell 68 percent, while Lennar Corp., the largest, slid 66 percent.
The Russell 2000 underperformed the S&P 500 for the first time since 1998. The small-cap measure slipped 2.8 percent in 2007, its first loss in five years. Russell 2000 housing-related stocks made up nine of the ten biggest drops with year's declines exceeding 80 percent as forecloses reached a record and overdue loan payments climbed.
The Russell 2000 Index, a benchmark for companies with a median market value of $589.6 million, dropped 0.7 percent to 766.03 today. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 0.6 percent to 14,819.58. Based on its decline, the value of stocks decreased by $115 billion.