NEW YORK -- Stocks limped across the finish line yesterday to end their worst full-year performance since 1981, when the nation sank into its last recession.
Hardest hit were the airline stocks, riddled by rising oil prices and depressed by the collapse of the union-led effort to buy out UAL. The Dow Jones transportation average fell a stunning 23 percent for the year.
Meanwhile, Middle East tensions and slipping confidence that an economic recovery is coming soon helped squash a year-end rally.
The market stalled in the final weeks of December after having climbed back about halfway from its October lows toward its peak of July. Yesterday, the Dow Jones industrial average added 4.45 points, to 2,633.66, on the strength of a closing surge that lifted stocks from narrow losses on the last trading day of the year.
Standard & Poor's 500-stock index rose 1.50, to 330.22 yesterday, the New York Stock Exchange composite index gained 0.84, to 180.49, and the Dow Jones equity market index added 1.20, to 305.65.
Advancing stocks outpaced decliners by a 5-to-3 ratio yesterday. Big board volume totaled a meager 115.2 million shares, up from Friday's 111 million shares. Many traders stayed home yesterday to extend their weekend through New Year's today.
The Dow Jones was the best performer among the market's major averages in 1990. The index of 30 blue chip stocks lost only 4.3 percent for the year, largely because investors turned to big capitalized consumer-product stocks as a haven from the expected recession.
"It's kind of flukey," Dean Witter Reynolds technical analyst Philip Roth said of the Dow industrials' performance. He noted that the Dow Jones industrial average is an arithmetic index that gives greater weight to higher-priced stocks.
"Consumer staple stocks, which happen to be big winners this year, are the higher-priced stocks in the index and have a bigger impact," he said. Among those stocks are Merck, Procter & Gamble and Philip Morris -- all of which ended 1990 well above where they started off the year. Procter & Gamble alone surged 23 percent.
Oil stocks, which gained late in the year as oil prices surged, also helped cushion the Dow industrials.
Among individual stocks yesterday, Pinelands, spun off from MCA Inc., traded at 17 3/4 after opening at 16 3/4 . Occidental Petroleum, the most active issue, was off 3/8 at 18 3/8 . MNC Financial, which has said it will not pay fourth-quarter dividends on its preferred or common stock, fell 1/8 , to 3 1/4 . Northrop Corp. fell 1 7/8 , to 17 3/8 , on reports that the Air Force is freezing 1991 production of the company's B-2 Stealth bomber.