Annual Market Review: 2012

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Posted on January 4th, 2013

Resilience in the face of adversity seemed to be the theme for 2012. Hurricanes that shuttered Wall Street for two days and cut oil production, the threat of a “Grexit” from the euro, Europe’s record unemployment and second recession in four years, Chinese growth that hit a three-year low, and uncertainty about elections here and abroad–such formidable obstacles slowed the progress of the global economy but didn’t bring it to its knees.

Debt-related news out of Europe continued to play a major role in global bond and equities markets. Despite cracks in the French/German alliance, the eurozone finally appeared more willing to take joint action to enforce fiscal discipline. In exchange for fresh austerity measures, Greece got a reprieve on its debt reduction deadline. Despite growth that went from explosive to merely robust, China chose new leaders for the next decade who are considered to favor existing policies. In the United States, strong U.S. corporate earnings had begun by year’s end to show the toll taken by a slowing global economy. Solid if not robust economic growth, an improving housing market, lower unemployment, and low inflation all had to contend with concerns worldwide about the fiscal cliff.

However, that resilience could be tested in 2013. Though a last-minute bargain averted a full-scale plunge off the fiscal cliff, headwinds could pick up if Washington can’t reach an agreement (again) on the debt ceiling and spending cuts still scheduled to begin in 2013.

Market/Index 2011 Close As of 9/28 As of 12/31 Q4 Change* 2012 Change*
DJIA 12217.56 13437.13 13104.14 -2.48% 7.26%
NASDAQ 2605.15 3116.23 3019.51 -3.10% 15.91%
S&P 500 1257.60 1440.67 1426.19 -1.01% 13.41%
Russell 2000 740.92 837.45 849.35 1.42% 14.63%
Global Dow 1801.60 1921.70 1995.96 3.86% 10.78%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 1.89% 1.65% 1.78% 13 bps -11 bps

*Equities figures reflect price changes, not total return.

 

 

Source: Broadridge