In regards to stocks, it was a rocky month. The S&P 500 plummeted 4% in the week following the President’s reelection before rebounding on economic optimism. The S&P 500 finished November 0.58% higher even though there has been little progress on talks to prevent spending cuts and tax increases. Some analysts doubt the dire predictions on the tax increase. Year -to-date (Nov 30) total returns on the S&P 500 are a welcome 14.96%.

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.

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.

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.

The possibility of Greece leaving the Eurozone thereby triggering a string of sovereign defaults remains a key focus of the market.  A re-run election in Greece, June 17, failed to curb uncertainty. It remains at a high level.

Global stock markets ended the month with their worst performance in two years. A flight to safety pushed the U.S. 10-year Treasury yield to an all-time low of 1.58%. The S&P 500 index fell 6.27%. This was the index’s eighth worst May in history, and its worst performance since its 8.20% loss in May 2010.  But that year the returns for the index actually totaled 15.06%. Currently, the S&P is down 7.66% from its April 2nd high, but it remains 5.16% ahead YTD with dividends included.

Global stock markets have stumbled since the start of the second quarter as the Chinese economy slowed, the euro zone crisis escalated, and U.S. manufacturing and employment gains tapered off.  The decline in stock prices has been accompanied by sharp increases in volatility.

In April, the S&P 500 stock index posted its first monthly decline since November. Stocks slipped on rising fear that the U.S. economic recovery might be faltering. The deep recession in Spain, combined with trouble in its banking sector and reports of a double dip recession in Britain highlighted risks in the developed markets and raised more questions about whether government belt tightening in Europe had gone too far.