By Damian J. Troise and Alex Veiga

The S&P 500 and the Dow Jones Industrial Average ended 2020 at more record highs Thursday, closing out one of the most tumultuous years in recent memory. The S&P 500 rose 0.6% and ended the year up 16%, or roughly 18% including dividends. 2020 saw a breathtaking nosedive in markets in the spring as the coronavirus took hold, followed by steady gains in the months to come as hopes built for an eventual return to something like normal. Several overseas markets were closed for holidays, and U.S. markets will be closed for New Years Day on Friday.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

U.S. stock indexes edged mostly higher in afternoon trading Thursday, inching within striking distance of record highs as investors close the book on a tumultuous year.

The S&P 500 was up 0.3%, on track to eclipse the all-time high it set on Monday. The Dow Jones Industrial Average, which set a record high Wednesday, was down up 83 points, or 0.3%, to 30,492 as of 3 p.m. Eastern. The Nasdaq composite slipped 0.1%.

Health care, financial and communications companies held up well in muted trading. A mix of technology, retail and travel-related stocks fell the most.

Markets were mostly quiet early into the final day of trading for the year. Several overseas markets were closed for holidays, and U.S. markets will be closed for New Years Day on Friday.

Major indexes are all on track to close the year with solid gains. The benchmark S&P 500 is poised for a gain of almost 16%, or nearly 18% including dividends. The technology-heavy Nasdaq could close the year with a gain of more than 40%.

The virus pandemic shocked markets early in the year. The S&P 500 fell 8.4% in February, then plunged 12.5% in March as the pandemic essentially froze the global economy. Businesses shut down in the face of the virus threat and tighter government restrictions. People shifted to working, shopping and doing pretty much everything else from home.

The dire economic situation weighed heavily on almost any company that relied on direct consumer spending or a physical presence, including airlines, restaurants, hotels and mall-based retailers.

Trading became volatile, especially in the early weeks of the pandemic, as investors scrambled amid an increasingly grim economic outlook. The Dow had several day-to-day swings of about 2,000 points. And the S&P 500 rose or fell by at least 1% on twice as many days in 2020 than it did, on average, since 1950.

The VIX, which measures how much volatility investors expect from the S&P 500, climbed to a record high 82.69 in March and remained above its historical average for much of the year.

Wall Street didn’t stay down for long though, thanks in large part to unprecedented actions from the Federal Reserve and Congress to support the economy. Investors flocked to big technology companies such as Apple and Amazon and smaller companies like Grubhub and Etsy that were poised to take advantage of the shift to working and shopping from home.

“We came into the year expecting slow growth and it turned out to be the fastest bear market recovery in history,” said Sunitha Thomas, national portfolio advisor at Northern Trust Wealth Management.

The S&P 500 jumped 12.7% in April. From there, markets disconnected from the rest of the still-reeling economy and pushed higher in fits and starts as vaccine development progressed and analysts and economists looked ahead to the eventual end of the pandemic.

Thomas said the massive Federal Reserve actions early in the pandemic helped shore up the markets and many companies had learned their lesson from the financial crisis in 2008 and started immediately cutting costs.

The market's turnaround was faster than anyone might have expected in March, when the S&P 500′s nearly 11-year bull-market run ended. By August, the index had recovered all of its losses and climbed to new highs. As of Monday, the S&P 500 set 32 record highs in 2020.

“It was another reminder that unless you have a foolproof market-timing technique, the adage to remember is it’s always better buy than bail,” said Sam Stovall, chief investment strategist at CFRA.

The end of the virus and its pummeling of the economy seems even closer now that vaccine approval and distribution is ramping up. The U.S. and U.K. have both approved Pfizer's COVID-19 vaccine and Britain recently approved another vaccine from AstraZeneca and Oxford University. Meanwhile, the U.S. government has approved another round of aid for businesses and people dealing with another surge in the virus and tighter restrictions on businesses.

Thomas expects pent-up demand and high savings rates to help drive an economic recovery in 2021. Many of the more beaten-down stocks will benefit from a “vaccine-shaped” recovery as the number of vaccines on the market increases and distribution widens.

“We have more visibility that by midyear we start to be able to reopen the economy,” she said.

The sharp run-up in stock prices relative to the outlook for earnings growth suggests stocks could be in for a correction, or drop of at least 10%, in 2021, Stovall said.

“There's a good possibility that we get a deep pullback — pullbacks being 5%-10% — or maybe a shallow correction,” he said. “Enough to remind investors that share prices don't go up forever.”

Trading was closed in Tokyo and South Korea as well as Germany. France’s CAC 40 slipped 0.9% and Britain’s FTSE 100 lost 1.5%.

Updated on December 31, 2020, at 4:06 p.m. ET.

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