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Published: Saturday, 12/31/2011

Market ends '11 where it started

Results belie year of wild swings


NEW YORK -- The stock market ended a tumultuous year right where it started.

Despite climbs and falls, unexpected blows and triumphs, the hullabaloo proved for naught. The Standard & Poor's 500 index closed Friday at 1,257.60, 0.04 point below where it started the year.

"If you fell asleep Jan. 1 and woke up today, you'd think nothing had happened," said Jack Ablin, Harris Private Bank chief investment officer. "But it's been up and down all year. It's been crazy."

It was a year when U.S. firms were supposed to run out of ways to make big profits. They generated more than ever. It was a year when the United States lost its triple-A credit rating, which should have spooked bond buyers. Investors bought more. It was a year when stocks caught fire, then collapsed to near bear-market lows.

Among stocks, some were surprising. Scaredy-cat investors who bought the most conservative and dullest -- utilities -- gained 15 percent, the biggest price rise of the 10 industry sectors in the S&P 500. Other winners were consumer staples, up 11 percent, and health-care companies, 10 percent.

Other market curiosities:

Bad year, great quarter. Despite disappointing returns, the last three months were impressive, which could bode well for 2012. The S&P 500 rose 11 percent. The Dow Jones industrials climbed 1,344 points, or 12 percent, the largest quarterly point gain in history. The Dow closed up 5.5 percent for the year.

Buy American is back. A broad index of the Treasury market gained 9.6 percent, despite the U.S. government being slightly less likely to repay debt, according to S&P. In August, the agency stripped the U.S. triple-A rating, citing debt and politics.

For investors, 2011 wasn't supposed to end this way. At the year's start, the Great Recession was 1 1/2 years behind us and the recovery was gaining momentum. But manufacturing slowed after April, companies stopped hiring and consumer confidence plummeted, taking with it those hopes of big stock gains.

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