"the S&P 500 index, at 1249 by Friday's close, ends 2005 pretty much in the middle of the range of where Wall Street strategists said it would at the start of the year. "
By Nick GodtWhat a Year: Unsatisfying End
By Nick Godt
12/30/2005 5:15 PM EST
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So ends 2005, a year in which the price of oil, gold, and Google's (GOOG:Nasdaq - commentary - research - Cramer's Take) soared, while the Federal Reserve hiked interest rates by 2%, General Motors (GM:NYSE - commentary - research - Cramer's Take) hit twenty-plus year lows and, presumably, the housing "boom" reached a top.
As the market looks towards 2006, uncertainties abound. Most prominently: Will a cooling housing market take the fizz out of consumption next year and slow the economy (or worse)?
Compounding the mixed results for the year (and dampening optimism for 2006), the yield curve inverted this week, meaning long-term yields have fallen below short-term ones, historically a harbinger of an economic downturn.
The yield of a 10-year Treasury bond settled at 4.40% Friday, barely above the yield of a two-year note at 4.39%. The yield curve, which plots the yields of short- to long-term bonds, inverted twice in the final week of the year.
Still, the S&P 500 index, at 1249 by Friday's close, ends 2005 pretty much in the middle of the range of where Wall Street strategists said it would at the start of the year.
But since optimism ran high after a strong rally in November -- and signals from the Fed that its 18-month long tightening campaign may be near the end, it's hard to pretend that December was not a disappointment.
A hoped-for Santa Claus rally never materialized, and at the close of trading Friday, the stock market closed the week, the month, and the year on a uninspiring note.