Volatile October Ends Five-Month Down Trend

Clarksville, 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.