The Dow in 2013: Up 26.5% And Hungry For More

The Dow in 2013: Up 26.5% And Hungry For More

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrials closed 2013 on a positive note, climbing 72 points to finish just below 16,577. For the 52nd time this year, the blue-chip index ended the trading day at a record high. Investors remained confident about the prospects for continued gains even amid changes in Federal Reserve monetary policy moves that could signal major macroeconomic shifts going forward.

Including today's gains, the Dow finished up 26.5%, or 3,472 points, on the year. That marks the average's biggest annual point-gain ever, and the best percentage gain for the index since 1995. Yet it also is a small disappointment, as the Dow underperformed the broader S&P 500 and its almost 30% gain in 2013, as well as the 38% jump in the Nasdaq Composite .

Twenty-nine of the 30 Dow component stocks posted gains for the year. Boeing flew the highest as of the end of the year, climbing 80% on the strength of its order backlog and the ongoing resolution of issues in the launch of its 787 Dreamliner aircraft. Despite huge bumps along the way, including battery problems that grounded the Dreamliner for months early in 2013, Boeing successfully overcame negative publicity and nervousness among customers and investors alike to continue posting huge order wins from thriving airlines. Even with the gains, Boeing still has plenty of potential to climb further if demand remains strong.

The sole laggard in the Dow was IBM , whose 0.6% gain today left the stock with a negative return of less than 1% for 2013. Suffering from poor conditions that hurt the technology giant's revenue, IBM faced the prospect of heightened competition all year. As information technology spending starts to rebound, though, IBM will at least have an opportunity to recover in 2014. To do so, IBM will have to demonstrate its innovation and superior performance compared to hungry rivals seeking to expand beyond niche specialties to become one-stop shops for all things technology-related.

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