A down day, but stocks gain in '07 despite subprime

By Jennifer Coogan

NEW YORK (Reuters) - Stocks fell on Monday, but the market managed to make a modest advance in 2007 after gains in energy and technology offset the dramatic sell-off in financials from the mortgage market meltdown.

The Nasdaq Composite handily outperformed the Standard & Poor's 500 index, thanks to the Nasdaq's heavy concentration of technology components. Tech shares such as Apple Inc (AAPL.O) got a lift from the weak dollar, which boosted overseas sales. Meanwhile, the tech sector's low exposure to debt left it unscathed from the freeze in credit markets.

The subprime crisis hit a range of banks, mortgage lenders, bond insurers and home builders, driving their shares down more than 50 percent for the year. The slumping U.S. housing market also reined in consumer confidence and pushed retailers' shares down this year.

"In 2007, if you didn't have a lot of exposure to financials or consumer discretionaries, you probably had a decent year," said Matt Kaufler, portfolio manager at Clover Capital in Rochester, New York.

For the year, the Nasdaq composite index rose 9.8 percent -- outshining the broad S&P 500, which gained 3.5 percent, and the blue-chip Dow Jones industrial average, which climbed 6.4 percent.

For the fourth quarter, though, all three major U.S. stock indexes had a loss.

On Monday, the Dow Jones industrial average .DJI fell 101.05 points, or 0.76 percent, to end at 13,264.82. The Standard & Poor's 500 Index .SPX slipped 10.13 points, or 0.69 percent, to 1,468.36. The Nasdaq Composite Index .IXIC dropped 22.18 points, or 0.83 percent, to 2,652.28.

A recent spate of disappointing economic indicators and geopolitical turmoil that followed the assassination last Thursday of Pakistani opposition leader Benazir Bhutto, gave investors reasons to be cautious in the last few sessions of 2007.

Investors bought lower-risk U.S. Treasury bonds and sold stocks from the year's best-performing sectors in a last-minute effort to beef up yearly profits.

Oil stocks such as Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) were under the most selling pressure on Monday. The energy sector ended the year in first place after a jump of 57 percent in U.S. crude oil futures prices in 2007.

On the New York Mercantile Exchange, the February crude oil contract settled on Monday at $95.98 a barrel, down 2 cents for the day.

Exxon Mobil's stock, up more than 22 percent for the year, fell 1.4 percent on Monday to close at $93.69 on the New York Stock Exchange. Exxon was the biggest drag on the S&P 500. Chevron shares, up nearly 27 percent in 2007, lost 1.6 percent on Monday to close at $93.33 on the NYSE.

Shares of Apple slipped 0.9 percent on Monday to close at $198.08 on the Nasdaq. For 2007, the price of the iPod maker's stock surged almost 134 percent, making it the second-best gainer in the S&P 500.

Research in Motion (RIM.TO) (RIMM.O) was the No. 2 drag on the Nasdaq 100, down 3 percent on Monday at $113.40.

Despite its drop on New Year's Eve, the BlackBerry maker's stock skyrocketed 166 percent for the year when calculated on a split-adjusted basis.