Wall Street marched higher Friday in the last trading day of a year most will remember for the stock market's great comeback _ pulling off a year-end rally that pushed the Dow Jones industrials past 12,000 for the first time.
By all accounts, 2006 was a very good year for stocks as bullish investors bounced back from a slumping housing market and the Federal Reserve's two-year campaign of interest rate hikes. The markets approached record levels in the spring, pulled back sharply in the summer, but found a clear direction in the fall to send the major indexes to multi-year highs.
Blue chips were the standouts of 2006. The Dow Jones industrial average, an index of 30 of the nation's biggest companies, hit record levels dozens of times since closing at 12,011.73 on Oct. 19 and has since surged to an intraday high of 12,529.87.
This is the best year for the stock market's most prominent benchmark since 2003, when the market staged a massive recovery from levels sideswiped by a bear market. But, 2006 will really be remembered for the market's soaring to heights not seen since frenzied trading during the height of the dot-com era.
Wall Street's belief that the economy has withstood well the Fed's rate hikes and the impact of record high oil prices fed the rally. And some analysts expect the advance to continue.
"The stock market is correct in its judgment that we are probably only in the fifth or sixth inning of the game, and that this (economic) expansion may even go into extra innings," said Stuart Schweitzer, global markets strategist for JPMorgan Asset & Wealth Management. "This was a barn-burner of a year, and I expect reasonably solid results over the course of 2007."
In midday trading, the Dow rose 4.33, or 0.03 percent, to 12,505.85.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 0.46, or 0.03 percent, to 1,424.27, and the Nasdaq composite index was up 4.34, or 0.18 percent, to 2,429.91.
At this level, the indexes are heading toward a double-digit gain for the year. The Dow Jones industrials are up 16.68 percent, the Nasdaq up 10.17 percent, and the S&P up 14.04 percent.
It wasn't just the stock markets that made significant gains in 2006.
The bond market moved in lockstep with stocks _ a rare event on Wall Street. Investors bought into the equities markets because of a strong economy and robust corporate confidence. Meanwhile, typically more conservative bond investors used the fixed-income market as a hedge for a possible recession and interest rate cuts.
This year was also a bit of a rule bender for Treasuries. Yields on long-term Treasury notes and bonds were lower than for short-term Treasury bills. Junk bonds were in such demand that their yields were on parity with those of investment-grade bonds.
Bonds were little changed in Friday's session, with the yield on the benchmark 10-year Treasury rising to 4.72 percent from 4.71 percent late Friday. The yield stood at 4.37 percent on the first day of trading this year, but was over 5 percent just a few months ago.
The dollar lost support in 2006 as the Federal Reserve ended a two-year campaign of rate hikes on Aug. 8, and has kept rates unchanged in its past three meetings. Rising interest rates in Europe could help the region lure foreign investment away from the United States, further pressuring the dollar next year.
The dollar was mixed against major currencies on Friday, while gold prices edged lower after a recent rally. Investors have sent precious metals sharply higher, viewing commodities like gold and silver as safe-haven investments instead of the dollar.
Plunging oil prices also fed the stock market's rally. Crude reached all-time highs in the summer of 2006 when it briefly surpassed $78 a barrel due to the resilience of consumer demand and expectations of a bad hurricane season. But energy prices soon plummeted back to 2005 levels by the fall when traders saw that refiners in the Gulf of Mexico were untouched by hurricanes, and realized global crude inventories remained ample.
The price of a barrel of light sweet crude on Friday fell 13 cents to $60.40 on the New York Mercantile Exchange _ about 23 percent below its highs of the year.
There was little corporate news as traders looked toward a four-day break that includes a suspension of trading for New Year's Day and the funeral of President Gerald R. Ford. And, again trading was thin _ typical of the week between Christmas and New Year's.
Apple Computer Inc. rose $4.03, or 5 percent, to $84.91. The company said Friday in a filing with the Securities and Exchange Commission that it found "no misconduct by current management " in an internal probe of how it handles stock options.
Declining issues outnumbered advancers by a razor-thin margin on the New York Stock Exchange, where volume came to an extremely light 253.4 million shares.
The Russell 2000 index of smaller companies dipped 0.10, or 0.01 percent, to 794.38.