For the U.S. stock market, 2011 was a long wild ride to nowhere.
The broad S&P 500 endured huge daily swings but a year of drama left the index almost where it started. It lost a mere 0.003 percent, closest to unchanged since 1947, according to Standard & Poor's.
Global markets have been battered this year by the euro-zone debt crisis, upheaval in the Middle East, and U.S. political gridlock. Similar events probably await investors in 2012.
The earnings and fundamentals were there for companies, but the political crisis and paralysis in Washington and Europe were too much, said Martin Sass, who founded and runs the $7.5 billion M.D. Sass hedge fund.
They overwhelmed the fundamentals. I didn't think the euro- zone crisis would have been so protracted as it has become.
The Dow industrials gained 5.5 percent for the year as investors sought safety in large-cap, dividend-paying stocks. The Nasdaq lost 1.8 percent.
Investors took out their ire on the financials <.GSPF>, which were the weakest group this year, falling more than 18 percent. Concerns about exposure to Europe and the threat of a renewed financial crisis hurt those shares.
Bank of America Corp
Cabot Oil & Gas Corp
Defensive sectors like utilities outperformed growth sectors, underscoring the view that investors were concerned about the economic outlook.
Reflecting the wild market swings, the CBOE Volatility Index, or VIX <.VIX>, rose about 32 percent for the year, the first increase since 2008. The S&P 500 climbed 9 percent at its peak, and dropped 14.5 percent to its bottom.
One potential silver lining headed into 2012 is that after relatively flat years, the market tends to bounce.
The other times (the S&P 500) didn't change much during the year, it performed quite well during the next year, said Jason Goepfert, president of SentimenTrader.com in a report.
Overall, the years after these small-change years did well, especially during the past 50 years.
Of those, the next year returned a median gain of 17.8 percent, according to Goepfert's data. The maximum loss averaged
a decline of only 1.6 percent versus a maximum gain that averaged 20.9 percent. He also noted the final session of the year has not had a great run lately, being positive only 34 percent of the time during the past 30 years.
A DOWNBEAT FRIDAY
On Friday, the Dow Jones industrial average <.DJI> fell 69.48 points, or 0.57 percent, to 12,217.56 at the close. The Standard & Poor's 500 Index <.SPX> slipped 5.42 points, or 0.43 percent, to 1,257.60. The Nasdaq Composite Index <.IXIC> dropped 8.59 points, or 0.33 percent, to 2,605.15.
Daily volume this week has been running about half of the average, with many traders away for the Christmas and New Year's holidays. The anemic action amplified moves in both directions.
European shares closed up on Friday, but recorded their biggest annual drop in three years as debt tensions in the euro zone strained the financial sector and threatened to derail a fragile economic recovery. <.EU>
Some believe investors may have become too panic-stricken about Europe, an issue that will dominate headlines in coming months.
Most of the Italian debt gets rolled over in the first quarter ... Once that debt's rolled, if it's rolled successfully, then there isn't any more to talk about this subject we've beaten to death for over a year now, said Ken Fisher, chief executive of Fisher Investments.
For a graphic on 2011 market performance, see:
Composite volume was 4.07 billion shares on the New York Stock Exchange, the Nasdaq and Amex, well below this year's daily average of about 7.84 billion shares.
Decliners led advancers on the New York Stock Exchange by about 4 to 3, while on the Nasdaq, about three stocks fell for every two that rose.
(Reporting By Angela Moon; Additional reporting by Daniel Bases in New York and Doris Frankel in Chicago; Editing by Jan Paschal)