Fri December 30, 2011
After Much Tumult, Wall Street Ends Year Where It Started
We saw a crazy market this year. It swung so wildly in both directions, that ending a day a couple of percentage points up or down became the norm.
But after much tumult, Wall Street closed its year today not far from where it started it.
The AP reports:
"In the final tally, despite big climbs and falls, unexpected blows and surprising triumphs, all the hullabaloo proved for naught. On Friday, the Standard & Poor's 500 index closed at 1,257.60. That's exactly 0.04 point below where it started the year.
"'If you fell asleep January 1 and woke up today, you'd think nothing had happened,' says Jack Ablin, chief investment officer of Harris Private Bank. 'But it's been up and down all year. It's been crazy.'"
The other major indices fared similarly. The Nasdaq lost 1.8 percent for the year, while the Dow ended 5.5 percent higher this year.
The Wall Street Journal reports that a preliminary analysis revealed that 0.04 change in the S&P is "the smallest annual move since at least 1947."
Bloomberg gives us a quick recap of the kind of year the markets had:
"The S&P 500 started the year with a rally, rising as much as 8.4 percent to a three-year high by the end of April and extending its rebound from a March 2009 bear-market low to 102 percent. The index tumbled throughout the summer as Congress and President Barack Obama struggled over U.S. deficit cuts, and sank further amid concern that Europe's debt crisis was threatening the global economic recovery. The S&P 500 fell as much as 19 percent from April to its low for the year on Oct. 3.
"Data signaling that the world's largest economy was weathering Europe's crisis helped the market rebound. The U.S. unemployment rate fell to 8.6 percent in November, the lowest since March 2009, after lingering at 9 percent or above for seven straight months."
All that drama led investors into the safety of the U.S. bond market, which significantly outperformed stocks, reports the Journal. One of the questions for 2012 is will shaky investors pull their money from bonds and reinvest it in the the markets? One analyst the Journal spoke to thinks the answer to that question may well tells us a lot about the future of the world economy:
"'Treasury yields are back at panic levels,' said Michael Gayed, chief investment strategist at Pension Partners. 'The bond market is sensing something very serious is coming in 2012, yet stock investors not so much. The answer of who is right, the bond market or the stock market, probably gets answered in the next three months and a trend will assert itself.'"