Hurricane Sandy forced Wall Street to close on October 29, the anniversary of the 1929 stock market crash. It was the exchanges' first weather related closing in 27 years. The hurricane and its after effects led to a two day shutdown. Yet despite the destruction wrought by the storm, when US Stock markets re-opened, a relatively normal day unfolded. The Dow Jones Industrial Average and the Nasdaq composite index both fell less than 1%. Meanwhile, the S&P 500 ended on the final trading day of the month, fractionally higher.

The New York Stock Exchange and Nasdaq are preparing to open for business as usual on Wednesday following an extraordinary storm that crippled many parts of Manhattan and prompted widespread power failures.

Due to Hurricane Sandy, the NYSE was closed Monday, October 29, 2012. The NYSE and other US stock and bond markets will remain closed Tuesday, October 30.

Investments into commodity-linked products have grown in recent years due to investors embracing alternative investments as a way to deal with inflation uncertainty in their portfolios.

Wall Street wrapped up a strong third quarter on a weak note. Stocks finished September with a second consecutive week of losses.  Prices were pulled lower by disappointing US manufacturing data and rising concerns over the euro zone's economy and sovereign-debt issues. Despite ending the quarter on a down note,  the S&P 500 index nonetheless returned 2.58% in September and 6.35% over the last three months. This brought year-to-date returns on the US benchmark to 16.44%, which is a lot to be grateful for.  While all major US asset classes delivered strong quarterly performance, large caps outperformed small, and value bested growth.

Trading volume was at its lowest in five-years but U.S. stocks still managed to finish the month with solid results. The S&P 500 ended August with a gain of 1.98%, a two-month run of 3.26% and a rise of 11.85% year-to-date. The summer rally confounded bears who predicted the stock market would repeat last year’s slump of 7.7% during July and August. The S&P Small Cap 600 index, which trailed the performance of the S&P 500 index in July, reversed its standing in August posting a 3.66% gain.

What are low volatility strategies? Low volatility strategies attempt to construct equity portfolios that minimize market risk. Investment risk is measured using historical returns and correlations between individual portfolios and stock market movements. Wall Street touts low volatility investment strategies as a hedge against market volatility because they are designed to carry less risk during periods of poor stock market performance. Low volatility investing is not a new concept but it has become increasingly popular given the high levels of market volatility experienced by equity investors during the 2008 financial crisis, the up-and-down movements in 2011, and the continued turbulence in 2012.

Two weeks ago, one of Wall Street’s largest market-making and trading firms, relying on a computerized trading program, shook investors’ confidence in the market. Trying to gain an edge on its competitors, seventeen-year-old Knight Capital Group rushed out new trading software that wasn’t ready. Instead of fulfilling customer orders, the software unintentionally generated millions of erroneous trades, causing sudden wild price swings in dozens of stocks. As trading volumes expanded, some Wall Street participants profited from the unusually dramatic price swings triggered by the faulty software. Many retail customers, having no idea what was going on, wound up losing money. Some journalists accused Wall Street insiders of using their trading tactics to rip off small investors: but the opposite, in this case, seems more accurate. The mishap cost Knight $440 million in trading losses and forced them to accept a lifeline to skirt collapse.

Concerned about economic growth, global central banks acted to stimulate borrowing. China’s central bank cut lending rates. The European central bank cut its benchmark interest rate. The Bank of England announced it would expand its holding of government bonds. The Federal Reserve announced 2 weeks ago that it would extend its own bond buying program until the end of the year.

First, I hope all our clients and friends affected by recent fires, stifling heat, and severe storms are safe and sound.