US STOCKS-Wall Street closes out wild pandemic year with Dow, S&P at records

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* S&P 500 notches annual gain of around 16%
* Nasdaq gains more than 43% on the year
* Weekly jobless claims fall for second straight week

(Updates to market close)
By Chuck Mikolajczak
NEW YORK, Dec 31 (Reuters) - U.S. stocks ended a tumultuous
year with the Dow and S&P 500 at records, as the three major
U.S. equity indexes notched solid-to-spectacular yearly gains
despite an economy upended by the COVID-19 virus as investors
looked to a post-pandemic world.
In a year that marked the end of the longest bull market on
record as pandemic-induced government lockdowns battered the
global economy, equities stormed back, with the S&P 500 climbing
more than 66% from its March 23 low, resulting in the shortest
bear market in history. The gains, which sent the Dow and S&P to record highs to
close out the year and the Nasdaq to a record earlier this week,
were fueled in part by massive fiscal and monetary stimulus put
in place to buttress the economy reeling from the coronavirus
fallout, as well as progress on a vaccine.
For the year, the S&P 500 gained about 16%, the Dow roughly
7% and the Nasdaq more than 43%, which marked the biggest yearly
gain for the tech-heavy index since 2009.
"For broad indexes, this is a bullish year despite the
craziness in the real world," said Mike Zigmont, head of
research and trading at Harvest Volatility Management.
"It feels very much to me like investors have decided the
world has changed forever, the coronavirus pandemic was the
catalyst and now investors have decided who the winners are and
who the losers are and are moving forward."
Still, data on Thursday was a reminder the economy still has
a lengthy recovery ahead as weekly initial jobless claims, while
declining for a second straight week to 787,000, remained well
above the peak of the 2007-2009 Great Recession. Tech .SPLRCT and consumer discretionary .SPLRCD were the
best performing sectors on the year, while energy, a laggard for
the past decade, was once again the weakest of the 11 major S&P
sectors on the year en route to its worst yearly performance
ever.
Mega-cap companies such as Amazon AMZN.O and Apple
.AAPL.O helped lift the broad S&P 500 and the Nasdaq, as well
as gains in names that have benefited from the "stay-at-home"
environment, such as online retailer ETSY Inc ETSY.O and
digital payment platform PayPal PYPL.O .
For the session unofficially, the Dow Jones Industrial
Average .DJI rose 191.34 points, or 0.63%, to 30,600.9, the
S&P 500 .SPX gained 24.37 points, or 0.65%, to 3,756.41 and
the Nasdaq Composite .IXIC added 23.03 points, or 0.18%, to
12,893.03.
Near-term expectations of bigger stimulus checks dimmed
after Senate Majority Leader Mitch McConnell blocked a quick
vote on Wednesday to back President Donald Trump's call to
increase COVID-19 relief checks to $2,000 from $600.
Risk assets were able to build on the rally off the March
low, adding to gains in November following a U.S. election that
investors viewed as likely to result in political gridlock and
optimism around vaccines approvals grew, but the momentum
stalled on worries over fresh fiscal stimulus and a new, highly
infectious COVID-19 variant spreading globally. All eyes are on two U.S. Senate races in Georgia next week
that will determine control of the chamber and influence
Democratic President-elect Joe Biden's ability to enact his
agenda.