Final-day sell-off sends S&P 500 to first yearly drop since 2011

Year 2015's last day featured seesaw moves as energy producers in S&P benchmark index advanced with oil after erasing an early drop

The Standard & Poor's 500 Index lost its grip on a fourth consecutive annual gain in the year's final trading session, as technology shares led a decline in US stocks paced by Apple Inc.

Apple fell for the fourth time in five days to extend its 2015 retreat to 4.6 per cent, its worst since 2008. The year's last day featured seesaw moves as energy producers in the benchmark index advanced with oil after erasing an early drop, though the group capped its biggest annual retreat in seven years.

The S&P 500 slumped one per cent to 2,043.76 at 4 pm in New York, with gauge falling 0.7 per cent for the year as selling accelerated in the final minutes of trading.

"This is the most poetic way you could end the year," said Jeff Clark, an analyst at Stansberry & Associates in San Francisco. "The market has basically done nothing. We've had some attempts to rally and some attempts to drop, but it's been a pretty frustrating year for trading. The momentum is in the bearish camp right now."

Markets are closed tomorrow for the New Year holiday. Trading volume has been thin all week, and the number of shares changing hands on US exchanges yesterday was the lowest for a full session this year.

December drop
Equities bucked the historical trend of gains in December. Amid a series of sharp sell-offs and rallies focused around the Federal Reserve's interest-rate boost, the S&P 500 fell 1.8 per cent this month, its worst December drop since 2002. Energy companies lost 10 per cent this month to cap their worst year since 2008. The market's torpor is likely to be broken next week as investors will return from the holiday to a swath of data, including gauges on the manufacturing and services industries, the monthly jobs report and minutes from the Fed meeting that ended with the first rate increase since 2006. While policy makers have forecast a gradual pace for future rate increases, they also stressed a dependence on the progress in economic data. A report on Friday showed the number of Americans filing applications for unemployment benefits rose more than projected during the Christmas week, reaching the highest level in almost six months, perhaps reflecting typical swings during holidays.

In the absence of the so-called Santa rally in December, the S&P 500 struggled to hold its gain this year, up only 0.2 per cent heading into the final day. The measure rose as much as 3.5 per cent in 2015, and fell 9.3 per cent at its low in August amid its first correction in four years, sparked by worries about weakness in China. Investor sentiment this year has wavered between optimism that the improving labour market was boosting the economy enough to handle higher borrowing costs, to concern that a slowdown in China would damp global growth. Weakness in the world's second-largest economy has weighed on commodity prices, dragging down energy and raw-material shares and putting a blight on US corporate profits.

Faith in the resilience of the US consumer and the rout in commodities was reflected in the S&P 500's best and worst performers this year. Netflix Inc and Amazon.com Inc both more than doubled in value, while Chesapeake Energy Corp and Consol Energy Corp tumbled more than 76 per cent. Eight energy producers in the benchmark posted stock-price losses in excess of 50 per cent this year.

Nine of the S&P 500's 10 main industries fell on Friday, with consumer staples and technology companies paring their 2015 gains. Energy shares rose after crude oil erased a one per cent drop. Consumer discretionary shares, the year's strongest performers, decreased one per cent Thursday.

Small-cap stocks lagged on the way to their first annual drop since 2011, with the Russell 2000 Index down 5.7 per cent. The gauge rose as much as 7.6 per cent to an all-time high in June, but faltered as its energy companies plunged 45 per cent and consumer discretionary shares lost more than 10 per cent.