Benchmarks ended the last trading day of 2015 in the red, dragged down by declines in technology shares. Apple ended lower and had a negative impact on the broader markets. Meanwhile, the S&P 500 and the Dow snapped a multi-year winning streak to end in negative territory for the year, while the Nasdaq ended in the green. The tech-laden index gained for four years in a row, its longest winning streak since 2007.
Several factors dragged the S&P 500 and the Dow lower for the year, including sluggish economic growth, currency devaluation in China, low commodity prices and continued strength in the dollar. However, the Nasdaq ended in the green for the year, banking on broad based gains among technology and biotechnology companies.
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On Thursday, the Dow Jones Industrial Average (DJI) declined 1% to close at 17,425.03. The Standard & Poor’s 500 (S&P 500) dropped 0.9% to close at 2,043.94. The tech-laden Nasdaq Composite Index closed at 5,007.41, decreasing 1.2%. The fear-gauge CBOE Volatility Index (VIX) gained 5.3% to settle at 18.21. A total of around 5.3 billion shares were traded on Thursday, lower than the last 20-session average of 7.2 billion. Decliners outpaced advancing stocks on the NYSE. For 60% stocks that declined, 37% advanced. Markets were closed on Friday for the New Year holiday.
Declines in technology shares dragged benchmarks down into negative territory on Thursday. Shares of Apple Inc. (AAPL) declined 1.9% and was the biggest laggard on all the three major indexes. Concerns about weak iPhone sales were cited to be the reason behind this decline in Apple’s shares. The iPhone maker also registered a loss of 4.5% for the year, its first annual loss since 2008.
Other key stocks from the tech sector including Alphabet Inc. (GOOGL), Microsoft Corporation (MSFT), Facebook, Inc. (FB) and AT&T, Inc. (T) decreased 1.6%, 1.5%, 1.5% and 0.9%, respectively. Overall, the Technology Select Sector SPDR (XLK) declined 1.4%, the highest loser among the S&P 500 sectors.
Thursday’s losses were broad based, with 11 out of 12 sectors of the S&P 500 ending in the red. The energy sector was able to defy the declining trend and ended in the green. Rise in oil prices boosted energy shares. Rebound in oil prices indicated some short covering ahead of year-end. The WTI crude oil price gained 1.2% to end at $34.04 a barrel. Additionally, the Brent crude oil advanced 2.2% to end at $37.28 a barrel. The Energy Select Sector SPDR (XLE) gained 0.5% on Thursday.
In economic news, the U.S Department of Labor reported that seasonally adjusted initial claims increased 20,000 to 287,000 in the week ending Dec 26, the largest weekly increase since Feb 2015. The rise was also more than the consensus estimate of initial claims increasing to 272,500.
Meanwhile, the Supply Management-Chicago noted that Chicago Business Barometer went down to 42.9 in December from November’s reading of 48.7. This decrease in the Chicago Purchasing Managers Index in December was in contrast to the consensus estimate of it increasing to 50.5.
For the month, the S&P 500, the Dow and the Nasdaq declined 0.3%, 0.3% and 0.6%, respectively. Benchmarks ended the month in the red due to declines in energy and material shares. Continuous decline in oil prices had a negative impact on energy shares. U.S. crude oil prices continued to hover near seven year low on fears of a continuing supply glut.
For the quarter, the S&P 500, the Dow and the Nasdaq gained 4.7%, 5.8% and 6.4%, respectively. Benchmarks ended in the green for the quarter, buoyed by gains in the financial and healthcare stocks. Indication of more economic stimulus programs in the Eurozone and China helped benchmarks to end in positive territory for the quarter.
For the year, the S&P 500 and the Dow declined 0.7% and 2.3%, respectively. Both the indexes ended a lackluster year on a disappointing note. Worries about slowing growth in China had a negative impact on investor sentiment. Meanwhile, plunging oil prices decimated energy companies and adversely affected junk bonds, while surge in the dollar had a negative impact on U.S. multinationals' overseas sales figures. Additionally, geo-political concerns in regions like Yemen, Ukraine and Syria added to the bearish sentiment.
Uncertainty about the timing of the first rate hike in a decade made investors belief that the Fed lacked confidence in the U.S. economic growth. This dragged stocks lower. However, the Fed did increase rates in December, banking on upbeat labor market.
The U.S. economy hardly helped the markets in 2015. For the first three months, it expanded at an annual rate of 0.6%. The growth was mostly affected by harsh winter weather and disruptions in West Coast ports. However, the economy picked up pace in the second quarter, gaining 3.9%, but slowed down to a gain of 2% in the third quarter.
Meanwhile, the Nasdaq posted a gain of 5.9% for the year. Strong gains from some bellwether stocks, including Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX) and Alphabet Inc. boosted the Nasdaq. Limited exposure to the beleaguered energy sector also helped the index to settle in positive territory.
Separately, consumer spending remained a bright spot in 2015, which eventually helped consumer discretionary sector to be the biggest gainer among the S&P 500 sectors for the year.
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