The stock market powered to its best annual gains in more than a decade on New Year's Eve, leaving the Dow and the S&P 500 indexes at record highs and the tech-heavy Nasdaq at its highest since September 2000.
The closely watched Dow Jones industrial average gained 26.5 percent over the calendar year, the broad-based S&P 500 index jumped 29.6 percent and the tech-focused Nasdaq composite index soared 38.3 percent higher. The Dow's annual percent gain was the best since 1995 and the S&P upswing was the best since 1997. The Nasdaq posted its best year since 2009.
The big question: Will it continue?
"It was a great year and we see the momentum continuing in 2014," said Christopher Giordano, founder of Los Gatos-based Giordano Wealth Management Group. "We think 2014 will be a great year -- not as good as 2013, but still very strong for the stock market."
"This is not a bubble, it is not a fake rally," added Brian Wesbury, chief economist with Illinois-based First Trust Advisors. "The stock market is supported by what I call a 'plow-horse economy' that is moving forward slowly."
"The economy is strong and the recovery has legs and traction," agreed Veda Cassells-Jones, president of San Jose-based C-J Advisory, a financial planning firm.
Some overseas markets also enjoyed robust gains. The Nikkei index of 225 Japan-based companies zoomed 56.7 percent higher in 2013, its best performance in 40 years, amid optimism about government efforts to resuscitate the moribund Japanese economy.
The improvement in the equity markets was bolstered by several Bay Area companies that outperformed the major financial indexes.
Los Gatos-based Netflix, with a gain of 297 percent, was the top-performing stock in the S&P 500, while Menlo Park-based Facebook, up 105 percent, ranked No. 10 for the index.
Mountain View-based Google was up 58 percent, Santa Clara-based Intel (INTC) gained 26 percent and San Jose-based Cisco Systems (CSCO) rose 14 percent. Cupertino-based Apple (AAPL), after suffering a steep plunge early in the year, saw its shares rise sharply in the final six months, gaining more than 5 percent for the year.
While it wasn't a public company for all of 2013, San Francisco-based Twitter has posted a 145 percent gain since it went public Nov. 6.
Some non-tech companies also had good years. Pleasanton-based Safeway soared 80 percent, San Francisco-based Wells Fargo gained nearly 33 percent and San Ramon-based Chevron rose more than 15 percent.
Despite the impressive gains over the past year, most financial experts seem to agree that the stock market boom isn't going to end anytime soon.
"The market has at least another 10 percent higher to go before we have the next correction, if then," Cassells-Jones said.
Wesbury agreed: "Stay bullish and stay invested." Some investment planners are concerned that the economy and stock markets could falter when the Federal Reserve reduces its stimulus program, but Wesbury believes that innovation can offset any negative effects.
"People forget about the entrepreneur," Wesbury said. "We have powerful new technologies like fracking, 3-D printing, the cloud, the smartphone, the tablet."
Of course, not everyone was as bullish. Michael O'Neill, principal executive with Lafayette-based Sage Investment Management, said the market is due for a correction, which typically is defined as a stock price drop of at least 10 percent.
"We did not have a correction for the past 12 months, which is highly unusual, and to go two years without a meaningful correction simply doesn't happen, period," O'Neill said. "People should have money ready so they can put it to good use when the correction occurs in 2014."
Jeffrey Elfont, president of Walnut Creek-based Pinnacle Capital Management, falls somewhere between the bulls and the bears.
"It's time to do some selective selling," Elfont said. "I would consider some selling in technology, in consumer staples -- which includes grocery and drugstore companies -- and in luxury retailers. This is a time for prudence."
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.