Most U.S. stocks retreated, as the Standard & Poor's 500 Index posted its second straight annual gain and had its best December since 1991.
Chevron Corp. and Hewlett-Packard Co. fell 0.4 percent each to lead declines in the Dow Jones industrial average. CVS Caremark Corp. lost 0.7 percent after the drugstore operator agreed to buy a unit of Universal American Financial Corp. Borders Group Inc. plunged 22 percent after suspending payments to some publishers. Alcoa Inc. rose 1.2 percent for the biggest gain in the Dow.
About seven stocks declined for every five that rose on U.S. exchanges. The S&P 500 fell less than 0.1 percent to 1,257.64. The index climbed 13 percent this year and 6.5 percent this month. The Dow gained 7.80 points, or 0.1 percent, to 11,577.51, and rose 11 percent this year. The 2010 advance follows a 23 percent rise in the S&P 500 in 2009, for the biggest two-year jump since the Internet-bubble rally of 1998 and 1999.
"This year has been like a long road trip. It wasn't always pleasant while on the way, but it was good once we reached the destination," said Lawrence Creatura, a Rochester-based fund manager at Federated Investors Inc., which oversees about $340 billion.
U.S. economic reports on Thursday showed initial applications for unemployment benefits declined and new-home sales increased that topped projections.
The S&P 500 has advanced 23 percent from its July low as companies reported better-than-estimated earnings and the Federal Reserve pledged to buy up to an extra $600 billion in Treasuries to stimulate the economy. Its rally to a two-year high has pushed its valuation to 15.7 times reported profits, the most since June.
This year's increase for the benchmark index for U.S. equities means the gauge has risen for seven of the past eight years. The index's 86 percent surge from a 12-year low on March 9, 2009, is the biggest for a comparable time period since 1955, according to Howard Silverblatt, senior index analyst at S&P.
The S&P 500's advance sent the gauge above 1,251.70 on Dec. 21 for the first time since Sept. 12, 2008, the last trading day before Lehman Brothers Holdings Inc. filed the world's biggest bankruptcy and prompted a 46 percent drop for the benchmark gauge through March 2009. The December rally for the benchmark index comes after it lost 0.2 percent in November and posted a combined gain of 13 percent in September and October, the biggest increase during those months since 1998.
"I'm quite optimistic about the performance of equity markets in the year ahead," said Andrew Popper, chief investment officer at SG Hambros Bank Ltd. in London. "We have the conditions in place for seeing this rally continuing. The economy is recovering at a global level."