3rd Quarter Market Recap (2011)

It was a roller-coaster quarter for equities, as weeks and even days when the Dow swung several hundred points in both directions seemed to become commonplace. By the end, the volatility had cost the Dow almost 15% since its April high. The small caps of the Russell 2000 suffered the most; by the end of the quarter the index had lost roughly a quarter of its value since April, putting it in bear-market territory. The S&P 500 lost 17% in the same time, while the Nasdaq has declined almost 16% since April. The Global Dow continued to slump under the weight of concerns about the global impact of Eurozone debt problems.

The deficit/debt ceiling debacle was eventually overshadowed by debt issues abroad. Despite Standard and Poor’s downgrade of the U.S. credit rating, demand from nervous investors sent Treasuries soaring, pushing yields on the 10-year note below 2% to levels not seen in decades. Gold benefitted from the anxiety for a while, hitting a new record just under $1,900 an ounce before plummeting below $1,700 in September as the dollar strengthened against the euro. After surpassing $100 a barrel, oil prices dropped back to around $80 on fears of the potential for renewed global recession. Other commodities also were hit at quarter’s end.