Markets finish on optimistic note
Published 1:55 pm Friday, January 7, 2011
The financial markets produced a quiet but strong finish to 2010, ending a year-long bumpy ride on an upbeat note.
Figures showed double-digit gains over the closing numbers of 2009, marking the second straight year of an impressive comeback that has been evident since the lows reached in March 2009.
The rising values of equities are reflected in the changes in the broad averages for the final quarter of 2010, as seen in the accompanying chart.
From a longer perspective, the three major indices also staged impressive gains for the year. The Dow Jones Industrial Average rose 11.02 percent from its December 2009 close. The NASDAQ Composite gained 16.91 percent while the S&P 500 gained 12.78 percent over its December 2009 close.
Compared to the rest of 2010, the fourth quarter was relatively placid.
The Federal Reserve’s announcement of a second round of quantitative easing held out hope that its commitment to buy up to $600 billion in long-term Treasury bonds might juice the economy by keeping interest rates low. The Consumer Confidence Index, which rose earlier in the quarter, slipped back in December. Jobless numbers remain high, while the housing industry hasn’t escaped the doldrums, largely, many economists say, because improvement in the housing sector depends to a great extent on the strengthening of the employment picture.
After posting solid gains through late April, world financial markets swooned as the European debt crisis stole the headlines and the European Union tried to make a deal to rescue Greece’s sick economy. Word soon spread that Ireland, Portugal, Spain and Italy were not on solid ground, either. The value of the euro plunged, though it has since recovered to levels seen before the crisis developed.
Soon after the U.S. markets began moving down, the May 6 “Flash Crash,” as many called it, swept the Dow down 1,000 points in the space of 20 minutes before the numbers began climbing back. And, of course, 2010 was the year of the BP oil spill in the Gulf of Mexico. It created not only great environmental concern, but investment questions about the future of the U.S. energy sector and the effects of the spill on important aspects of the U.S. economy. Customers and investors also continued to voice concern about the never-ending story of bank failures, which reached 157 at year’s end.
As we venture into 2011, you may be searching for new opportunities—prospects always exist, even in uncertain times. If you are interested in exploring whether there may be planning opportunities throughout the year ahead, please don’t hesitate to call me.
Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance mentioned does not include transaction costs, which would reduce an investor’s returns.
[table id=3 /]