captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie is off tonight. investors say good-bye to a year of wild market swings and lots of economic worries. but also a year that ends very close to where it began for the major stock averages. with today's fractional losses for those averages, the broad market ended the year virtually unchanged. the blue chip dow jones industrial average managed to end on the upside rising 5.5%. the nasdaq closed down almost 2%. how about the s&p 500, finishing with a loss of 4/100 of a percent, essentially in the same place it was at the end of last year. but for the 11th straight year gold prices rallied,

closing at $1,566 an ounce, that marks a 10% gain this year. after this roller-coaster ride for investors, 2012 is set to begin with many of the same concerns and uncertainties. suzanne pratt reports-- reports from new york. >> tomorrow evening new york's famed times square will be filled with thousands of people celebrating the new year. on wall street, however there will be far less partying as stock investors say good riddance to a tough year. 2011 has been volatile due to europe's debt crisis, slow economic growth here at home and political uncertainty around the globe. and there's little unanimity among financial pros as to whether 2012 will be an up or down year for the major averages. still most do agree trading will be sloppy and choppy. >> i think we're going to get more of the same. we're going get a lot of volatile markets and i think we'll continue to trade off headlines. >> reporter: and those headlines are likely to come

out of europe, at least in the first half of the year. >> you have uncertainty as to what is the path that europe is going to choose if it is a path of extreme austerity, you could actually depress the u.s. companies earnings and the u.s. economic growth. if on the other hand it's some combination of monetary easing in a framework for reducing the deficit, that would be yewed-- viewed as more popular. >> reporter: no matter what happens in the eurozone, u.s. economic growth is likely to be muted next area. yes, there are signs the recovery is gaining momentum. but headwinds are still meant 68. not only are-- plentful, not only are job prospects for millions of americans bleak, but the housing market remains in the cell ar and there is one more factor hickly to create uncertainty for investors in 2012, call it a global changing of the guard. >> think about the countries that potentially face a change in leadership. the united states, china, france, india, iran, korea,

you know, this is, these are yeses that represent about half the world's gdp. so the leadership changes can also be add to the volatility of the markets. >> before you head for the exit permanent leigh there are at least a few reasons to be positive about stocks in 2012. corporate profits are expected to remain decent. companies can still borrow at very low rates and don't forget the oodles of money in corporate coffers. >> companies that are generating a lot of cash and are likely to increase the payout, likely to increase dividends, i want to be clear. this is not a new theme. it is actually an extremely crowded theme it has been recommended by every single person in the world. doesn't make it wrong. >> investor sentiment is still a big wild card for next year, trade volume in the last few months has been very low suggesting a serious lack of conviction. and that is unlikely to change until there's better clarity on europe. suzanne pratt, nightly business report, new york.

>> tom: all that uncertainty has lead for one of the best place force investors this year, the bond market. most bond mutual funds did han stock mutual fund mutual funds in 2011. mutual fund focused on u.s. government bonds gained 9% on the year while the average large-cap core stock fund lost 3 slosh 10 of 1%. what to do after those gains? well, bond expert larry swedroe of buckingham asset magazine shares a portfolio suggestion for the new year. >> i think you should have a well thought out plan, an asset allocation, maybe 60% stock, 40% bonds or if you are older maybe it is 40% bonds and 60% stocks. and then you want to have the discipline to stay the course. and that means after a bond run, are you going to be selling bonds at high prices, meaning you are going to have a nice profit, you get to sell high. and you should be buying stocks at low prices when expected returns are high. >> tom: you can hear more of what larry says about investing in 2012. the full interview is on our web site, just go to

nbr.com. on the eve of the new year and new tension betweentt the west and iran. the country has threatened to close the strait of hormuz, the narrow waterway linking the percent sgufl to the arabian sea. 17 million barrels of oil moved through the strait every day. and about 230% of all oil trade-- 20% of all oil traded worldwide. oy ran threatened to close the strait if it faces new sanctions over its nuclear program. john kilduff is with us, founding partner. you have been following the oil market for years. how serious is the oil market taking this new threat? >> it's taking it relatively seriously. and it's certainly racheted up here over the past several weeks. to the western countries credit, for once, the sanctions are biting in iran. and that's why you are seeing a reaction by the iranians to them. and while though i think that they are certainly capable of causing trouble in-- trouble in the strait, we're not there yet in terms of being on the precipice. there's a lot of diplomatic

dancing work to go on before that occurs. >> tom: it hasn't impacted global supply yet. most of that oil that runs through the strait of hormuz heads to amount of we know that china has slowed down a little bit. but does that threaten the asian economies? >> well, it will. it will threaten all our economies if it were to get blocked. even momentarily, even if it is just a single barge in the one of the two shipping lanes. the headline will hit the tape, we're all going to buy it and not sort out the details until much later. because look, it's most of the saudi oil, it's iraq's southern production which is half of that country's output that goes through that narrow strait. uae and iranian oil for that matter. so it will be a shortage of oil that can't be made up by anyone that is why the stakes are so high. >> tom: what about the ability to reroute that persian gulf oil to pipelines and take it up to the north? >> it really is not an option. it's not going to be a sufficient ability.

like i said, the facility off suedee arabia's coast which i like to call the world's oil aorta really is irreplacable. just too much of a volume of oil to displace in any fashion. >> tom: john, we know it is a global market for crude. u.s. crude, domestic oil, meantime, just shy of $100 a barrel as we wind up this year. how about the impact of this threat continues to rise tensions with with the mideast. >> yeah, like you said, it is a global market. and the price reverberates around the world no matter where the shortage is. we saw what the libyan outage did to the brent crude oil prices and what it did to the west texas prices as well it kept it sustained at levels much higher than we otherwise would have been. and even this iranian situation has probably added a good 15 to 20 dollars a barrel in geo political premium right now. >> and finally what about the demand picture in the first quarter with europe still in question.

>> that lacks to be very much in doubt. not only here we're seeing gas-- gasoline demand down 5% week in and week out and the chinese economy say big question mark. the data we're getting from there is pointing to a slowdown. and whether or not it's going to be significant or not, what remains to be seen. but they are the swing demand center. so the way we talk about saudi arabia's oil being so precious to supply, china's demand is equally as precious on 9 demand side of the equation. >> tom: the outlook north outlook at oil. john kilduff. >> from aisle to ipo this year saw the return of the internet public offering. lots of hype surrounding stocks like linkedin and zynga but investors did not always buy into the hype. joya dass looks back at the year's newest stocks and the ipo everybody is waiting for next year. >> reporter: while the markets renewed their appetite for companies going public in 2011, it wasn't the blockbuster year as some had hoped. >> the companies that went

public, on average underperformed the s&p 500 by 12 percentage points. >> reporter: big tech ipo linkedin, groupon and game maker zynga started off with a bang but finished in some cases with a dull thud. >> groupon was the second one. they were up about 25, 30% on the first day. immediately in the first couple of weeks fell about 40%. but has shot back up above its ipo price, which is, we along with others are skeptical of that company and their business model. >> reporter: this year's top ipo performers included imperva, a leader in data security. gnc brand holdings, a mall favorite featuring nutrition bars. tangoe, a telecom group and a resign-- refiner and marketer of petroleum-based products this year's worst included china century dragon media a chinese television media buyer. friendfinder networks, a dating web site, imperial

holdings, a specialty finance company and finally kips bay medical whichn develops products such as mesh stents for use in bypass surge rae. a and that prings us to the ipo market of 2012. >> the balance sheets of the companies coming public, the deleveraged aspects of those companies that are coming public all point to a very strong cycle for the ipo market. and one that is going to put the individual investor or the institutional investor in a very advantaged position because valuation models are at historic lows. >> reporter: companies david is watching out for includegogo, the company that provides internet access aboard planes. software company we a to counsels the tv industry nds group holdings and marketing company exact target. and then there is the 800 pound gorilla to 2012 bolt or known as facebook. >> they have a prospectus ready to go. could file for the first

time in january and looks like they're targeting a second quarter 2012 filing. they're targeting a $100 billion valuation and look to raise 10 billion. >> with facebook revenues expected to top $4 billion for 2011, investors might just like this ipo. joya dass for nightly business report, new york. >> tom: still ahead from us tonight, pain from paying it to college to paying it off it was one of the big issues for the occupy wall street movement. we'll take a look at the state of student loans. a quiet ending today through the year with the major averages sinking just a bit. capping really a volatile year for investors. let's take a look at tonight's market focus. before we take a look back at the year that was we will lack at today's trading activity with stocks sliding in to the new year's holiday. and the long holiday weekend.

the dow industrials average spent almost the entire session in the red. the index continued dropping into the closing bell. ending the session down a little more than one half of 1 percent. but as we reported at the beginning of the program, blue chips were the stocks of interest for investors. the dow gained 5.5% this year, outpacing the other major stock averages. and leading the area for the dow, mcdonald's, shares shooting up more than 30% this year as its north american business continued to strengthen even as the company raised some menu prices making up for higher commodity prices. on the bottom the worst dow stock bank of america losing more than half its value as b of a continues battling the weak housing market. worries about its financial stability and questions about its corporate leadership. earlier this month bank of america shares dipped below $5 per share, tonight they are just above 5.5 dollars per share. >> the stocks had plenty of ups and downs but it was to the as volatile as some recent years. 38% of trading sessions this year had swings of at least

1% for the s&p 500. while that is more than last year it's actually less volatile than what we saw in 200. the year end numbers for the major indesee would have been worse if it wasn't for the rally in the fourth quarter. the dow industrials popping 12% this quarter, s&p 500 up 11%, ended the year plat. the nasdaq gained almost 8% over just the past three months. the the worst sector was the telecom sector dragged down by at&t dropping its buyout effort of t-mobile. today verizon was the telecom company cancelling plans and deciding not go through with a new $2 fee for wireless customers paying on-line orion line. customers and regulators complained about that. shares gained just a fraction. it was enough to put verize on at a new 452 week high, up 13% this year. two other telecom stocks rallying nicely, prepaid wirelessless provider metro pcs has renewed speculation there could be a buyout and

frontier communications sumping 3%, piper jaffray began coverage of the stock calling it neutral but expecting its dividend to continue in the near term. as we mentioned earlier, bonds beat stocks this year as investors sought safety despite the u.s. losing its aaa credit rating this summer. the interest rate on the 10 year government note fell today down to 1.88% as the rates fall, bond prices rise. this is the first area on record that 10-year note has closed out a cat ender year with an interest rate below 2%. and that is tonight's market focus.

>> tom: collectively americans owe more money on student loans now than we do on our credit cards. student debt is nearing $1 trillion. this was one of the big issues when college graduates joined occupy wall street rallies across the country this fall. many of them voicing concern about rising tuition costs and mounting student debt crisis. sylvia hall tonight takes a look at what's fueling soaring college costs and how to pay for them. >> reporter: if you went to an occupy wall street protest you wouldn't have had to stay long before hearing angry cries of frustrated college graduates. the frustration has been fueled by ever-higher college tuition forcing more students to borrow more money to afford a higher education. >> i'm very optimistic about college affordability over the next decade. >> mark cantrowities

publishes an information web site saying government uj abouts slashed university funding to have schools have students were i a higher price. this year alone tuition at four year public universities is up more than 8% from last year according to the college board. the recession also has dealt a below to financial aid grants leaving students to foot more of the bill than ever before. for many it's a bigger burden than they can afford. >> we see this first and foremost with the lower and moderate income students. they're the can av-- canars that eel over first. >> jane wellman tracks how colleges use their funds. she points to faculty benefits as one of the largest drivers of school spending. >> we can't expect students to pay for all of this,. >> she says many colleges are working to minimize tuition hikes. the school budgets aren't nimble enough to shift quickly. >> the structural problems of higher education finance have been growing for 20 years. but the depth of the recession, the 2008 recession and the slow

recovery from it, no one expects this is going to turn around any time soon. >> with prices rising experts like reyna say paying for college doesn't have to become a crisis because federal student loans carry a variety of payment plans. >> what ever you do, don't give up on it. don't listen to its bears because you have so much poer with, you are the consumer. no matter how much money is in your pocket right now, you are the consumer and you have options. and don't let's anybody tell you different. >> president obama took up the student debt issue earlier this year by easing payback terms on some federal student loans. but experts say ultimately making college more affordable must come from how states run higher education. sylvia hall, nightly business report, washington. >> tom: here is what we are watching for next week as 2012 get its under way. december economic data begins pouring in. we'll see auto sales, manufacturing and the number everybody is watching on friday of next week,

december's employment report. now monday with the stock markets closed we'll bring you an nbr special edition. women and leadership, focus on pamela newman-- newman one of the insurance industry's most powerful women. >> while we await the auto industry's december results strong sales help drive ford motor's recovery across the new milestone. 2011 sales of ford brand cars and trucks top two million units this week for the year. the first time since 2007 that any single auto brand has hit that mark. ford's f-series pickup trucks with the top selling vehicle in the nation as they have been for the past three decades. as far as total sales ford remains number two u.s. automaker behind general motors. >> president obama put his request to increase the nation's debt limit on hold. the white house was expected today to ask for $1.2 trillion increase in the government's ablt to gorrow money. the congress ral leaders asked for a delay saying they would like time to address the measure when back in session neck month. lawmakers are not due back

in washington until mid-january. the government is currently within about $100 billion of rooeching its borrowing limit. >> despite all the sound and fury over european debt problems, quantitative easing in the u.s. and record corporate profits, 2011 companies to an end,

we're pretty much began at least for the s&p 500 stock index. tonight's market monitor has one word to describe this year, dividends. sam stovall is the chief investment strategist for standard & poors capital iq with us tonight from new york. happy new year. >> happy new year, tom. >> tom: not exactly a bull market, certainly not a bear market it was a market where shareholders got paid to wait s that the best description? >> absolutely. not a bull, not a bear but a blah market and the investors who focused on quality as well as dividend yields were the ones who were rewarded. >> yeah, and you can see that when you take a look at the top three stock sectors in the s&p 500, utilities, consumer staples, health care. kind of defensive but also sectors that traditionally pay their shareholders. what went into that kind of stock performance this year? >> i think basically the reason why you had the three best performing sectors post total returns above 13% each and not be cyclical sectors in nature is because they were substitutes for bonds.

investors were looking for nice payouts, dividend yields, some sort of a return that was better than money markets and also that with not present them with the potential of a bubble as some investors fear with the bond market. so they focused on these good total return sectors. >> and at least for the utilities, a sector that really wasn't in the headlines much, not much news and perhaps it ben if thed from that? >> absolutely. you would have thought that telecom services group would have done better than did because it does have the highest dividend yield of all ten sectors in the s&p 500. but utilities beat out the telecom group. i think mainly as you said because of static demand and very high dividend. >> in the telecom group it was the big busted deal with at&t and t-mobile to end the year. many time financials, banks were the weakest again. you know, it's tough to get market to move forward when the financials aren't moving forward, isn't it? >> it's tough, certainly to get them moving forward for any long-term period. we were able to establish an

all-time high back in 2007 when the financials were starting their nosedive. but obviously that advance did not last ver long as we saw in 2008. so yes, we have the possibility for short term advances in the market without the financials, but nothing tray think would be very long-lasting. >> so here we are again at the end of another year, sam, you and i speaking pretty much where the s&p 500 was a year ago when we were together. but corporate profits are at record levels so, what kind of valuation does that present investors as we begin a new area. >> it presents investors with a very good valuation. actually a 10% discount to the meddian pe since 1936. and history also says but does not guarantee that you would need to see the yield on the 10-year note rise above 7% in order for the pe on the s&p to be able to fall below 11. so we have very attractive pe ratios. and based on the yield on the 10-year note, not a good likelihood that we'll see

single digits any time soon. >> with that in mind we'll take a look at the last year of trading for the s&p 500 and des pile-- despite all the ups and downs we are pretty much where we began the year at and close to the mid em of the range from the april high to the october low. so what is the outlook for the s&p 500 for 2012? >> well, the outlook on a price basis probably a very, very low double digit advance. corporate profits are likely to vants by more than 8% according to the s&p capital iq consensus. valuations look fairly attractive, no likelihood of a recession in the u.s., in our opinion, unless we were dragged lower by europe and the possibility of a hard landing in china. and from a technical perspective, our belief is that the market is sort of like a coiled spring, poised to move higher. certainly into the first quarter of 2012 tdz and of course that also brings up the third and fourth your quarter of 2012, big election corporation that hold back any gains? >> well, it could hold back some gains. i think the fact that 2011

the third year of the president's term in office was such a lackluster year, histor chrae tim plys that we could end up with a blah 2012 as well. >> tom: we'll leave it there. happy new year to you, great to sigh, our market monitor as we wind up the year, sam stovall with s&p capital iq. >> finally tonight, when the ball drops in times square, new york city tomorrow night t will bring in more than just the new year it also rings in the new energy, independence and security actor. a multiful but tomorrow's the occasion all 32,000 balls are energy efficient. the will build is designed to encourage new lighting technology like led and hall o again bulbs, aimed at cutting energy consumption and saving consumers money. thanks to all of those new balls that the time quarter ball drop will use, 88% electricity than previous years. that's it for us for this year and for tonight, it's nicely business report for friday december 30th, the last trading day of 2011.

i'm tom hudson. thanks for joining us. from all of us at nbr have a happy and safe new year. we'll see you back here in 2012. >> nightly business report is made possible by:. >> investing takes sper specifickive. it comes from and a half gaingt up and down markets for 60 years, spotting opportunities at home and abroad. global investing from franklin templeton investments. gain from our perspective. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> tom: when we're not on the air join us on-line at nbr.com, there you will find full episodes of the program. you'll find complete show transcans lptr ald the market stats on our facebook page and don't forget to follow us on twitteral at brzrpt. r