NEW YORK — For investors, 2010 was a 12-month tug of war between optimism and doubt. Stocks initially strengthened, the job market didn't, and fears of economic collapse in Europe and a chilling "flash crash" left many investors almost too stunned to act.
The year ended with stock markets at their highest level since the 2008 financial crisis on signs of an improving economy. But those same signs are producing worrisome side effects: Interest rates are on the rise, gold now tops $1,400 an ounce and oil prices, poised to exceed $100 a barrel, could send pump prices to $4 a gallon.
None of that seemed possible in the spring when many investors became convinced that the economy would fall back into recession. Then starting in summer, the mood shifted.
Government reports started to show the economy was gaining some strength. Corporate profits surged. And Federal Reserve Chairman Ben Bernanke signaled that the central bank was prepared to pump hundreds of billions of dollars into the economy to stimulate demand.
By the close of trading Friday, double-dip recession fears seemed like distant memories. The Standard & Poor's 500's 15.1 percent gain for the year, after dividends, was 53 percent more than its average historical gain.
Whether the gains will continue into 2011 will depend in part on how quickly the unemployment rate, now at 9.8 percent, drops. That will, in turn, be driven by how likely consumers are to increase their spending and how likely corporations are to spend the more than $1 trillion in cash on their balance sheets.
Many on Wall Street are optimistic that the bull market won't end in 2011. "All of the economic indicators are pointing to stronger growth next year," said Peter Cardillo, chief market economist at New York-based brokerage firm Avalon Partners Inc.
Trading on Friday was quiet and marked by some of the lowest trading volume of the year. The Dow Jones Industrial average rose 7.8 points to 11,577.5. The S&P 500 fell less than a point to 1,257.64. The Nasdaq composite fell 10.1 to 2,652.87.
For the year, each index returned double-digit gains. Over the course
* The Dow gained 1,149.46 points, or 11 percent. With dividends, its total return rose to 13.99 percent.
* The S&P 500 index gained 142.54 points, or 12.8 percent. Including dividends, its total return came to 15.1 percent.
* The Nasdaq index gained 383.72, or 16.9 percent, to close at 2,652.87. After dividends, its total return came to 18 percent.
In other markets:
* Oil prices ended the year above $91 a barrel after surging 34 percent since May as demand increased from China and other emerging markets. That could push gasoline prices to $4 a gallon by summer in some parts of the country, experts say.
* Gold topped $1,420 an ounce, up 31 percent for the year. Grains and soybean prices also ended the year sharply higher. The reason: China's seemingly insatiable demand for raw materials and speculators betting that they could profitably ride the momentum higher.
* The yield on the 10-year Treasury note ended the year at 3.29 percent. That's low by historical standards, but up from an early October low of 2.38 percent that helped push mortgage rates to 50-year lows. Now mortgage rates are rising again.
* Economists are predicting the dollar will fare better in the new year after it fell against the euro and the Japanese yen in 2010.