US stocks head for sixth straight year of gains as falling price of oil on oversupply depletes coffers of oil drillers

By Ken Sweet, AP

NEW YORK — U.S. stocks drifted lower on the final day of 2014 but the market was headed for its sixth straight year of gains.

The Dow Jones industrial average fell 68 points, or 0.4 percent, to 17,916 as of 3:15 p.m. Eastern time on Wednesday. The Standard & Poor’s 500 index edged down 12 points, or 0.6 percent, to 2,068 and the Nasdaq composite lost 23 points, or 1 percent, to 4,754.

Energy stocks edged lower as the price of oil fell. Benchmark U.S. crude dropped 85 cents to US$53.27 a barrel in New York. Oil has plunged since June amid abundant supplies and weak global demand. In total, the price fell 45 percent in 2014, the worst year for crude since the 2008 financial crisis.

Oil drillers fell the most. Diamond Offshore was the biggest decliner in the S&P 500, declining more than 3 percent. The energy component of the S&P 500 is down 10 percent this year

Trading has been slow Wednesday because it is New Year’s Eve and most fund managers have closed their books for the year. However, some investors do reshuffle their portfolios in the last few days of the year for tax purposes.

��I think most of the selling you’re seeing today is related to the fall in oil, as well as repositioning before the end of the year,�� said Cameron Hinds, regional chief investment officer for Wells Fargo Private Bank.

U.S. markets will be closed Thursday for New Year’s Day and will reopen Friday.

Chinese stocks surged after a weak manufacturing report reinforced hopes for new government stimulus measures as growth in the world’s No. 2 economy slows. Manufacturing in China contracted in December, according to an HSBC survey, the latest sign of a slowdown there.

��Heading into 2015, many of the challenges the market has faced this year will be recurring,�� said Stan Shamu, market strategist at IG in Melbourne, Australia.

Analysts say investors will be preoccupied by the slowdown in China, the economic malaise in Europe and Japan, and the possible timing of the U.S. Federal Reserve’s first interest rate increase since the financial crisis.

��The beginning part of the year will be dominated by Europe and then we’ll switch to the U.S. toward the middle of the year,�� Shamu said.

The S&P 500 is on pace to close up 12 percent for 2014, or 15 percent when dividends are included. That’s roughly double what strategists expected for the market at the beginning of the year.

��It turned out to be a great year for U.S. economic growth, which got us higher corporate profits as well,�� said Hinds of Wells Fargo.

Most strategists believe the stock market will also rise in 2015, but they expect more modest gains of between 4 percent and 6 percent.

The U.S. stock market had a great year, but around the world, stocks were mixed.

Europe had a difficult year. While Germany’s DAX rose 2.7 percent, France’s CAC-40 lost 0.5 percent and Britain’s FTSE 100 fell 2.7 percent. Greece had a terrible year, falling 29 percent.

In Asia, China’s Shanghai Composite jumped 53 percent while Hong Kong’s Heng Seng rose only 1.3 percent. Japan’s Nikkei was up 7.1 percent for 2014.

Prices for U.S. government bonds rose. The yield on the 10-year Treasury note edged down to 2.17 percent. The euro fell to US$1.21 from US$1.2162 late Tuesday. The dollar rose to 119.87 yen from 119.47 yen.