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Volatile October Ends Five-Month Down Trend

Raymond JamesClarksville, TN – October was a volatile month in the markets. The beginning of the month saw stocks move higher on mostly upbeat third-quarter earnings reports, eased recession fears and optimism on progress toward resolving the European debt crisis.

Toward the end of the month, U.S. stocks again rallied on news of a Greek debt deal that expanded the region’s bailout fund and on news that U.S. gross domestic product grew faster than in the previous period.

However, a few days later, stocks declined again, erasing some of the gains from the S&P 500’s biggest monthly advance since 1987. Investors appeared concerned that European leaders will have a hard time raising funds to contain the region’s sovereign debt crisis.

Despite the declines just before month end, the S&P 500 posted stellar performance, ending a five-month losing streak. The S&P 500 and Nasdaq climbed approximately 11% for the month, while the Dow Jones Industrial Average was up 9.5% in October. The gains gave all three indices their best monthly performances in decades.

 

10/31/11 Close

9/30/11 Close

Change

Gain/Loss

DJIA

11,955.01

10,913.38

1,041.63

9.54%

NASDAQ

2,684.41

2,415.40

269.01

11.14%

S&P 500

1,253.30

1,131.42

121.88

10.77%

 
In other economic news, the producer-price index (PPI) increased 0.8 percent in September, the most in five months, boosted by gasoline and food after no change in August. Year-to-year the PPI rose 6.9 percent. The National Association of Home Builders/Wells Fargo homebuilder-sentiment index rose from 14 in September to 18 in October, its highest since May 2010.

On the other hand, the Institute for Supply Management-Chicago’s business barometer dropped from 60.4 in September to 58.4 in October, inching closer to the dividing line between expansion and contraction.

Frazier Allen
Frazier Allenhttp://www.raymondjames.com/frazierallen
Frazier Allen, WMS, CRPS, Financial Advisor with F&M Bank 50 Franklin Street | Clarksville, TN 37040 | 931-553-2048
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