Monthly Archives: December 2011

The DJIA fell below 12,000 as it slipped 2.61% last week. The S&P 500 fell 2.83%, while the tech stocks got hit the hardest with the NASDAQ falling 3.46%. Broadly, stocks are in negative territory for the year. The DJIA currently stands as the only index in positive territory. Large cap stocks have outperformed small cap stocks and domestic equities have significantly outperformed international stocks.

The Federal Reserve Open Market Committee noted that the economy has been “expanding moderately” and gave no indication that additional quantitative easing measures are on the way. However, they will leave the fed funds rate at 0.25% and will continue to replace short-term bond holdings with longer dated maturities in an effort to keep long-term interest rates down.

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Equity markets exploded to the upside on a slew of positive news. For the week ending December 2^nd, the DJIA, S&P 500, and NASDAQ all gained over 7.0%. European stocks had even better results with the MSCI Europe ex UK Index soaring 9.2%. Oil prices also surged, closing the week at $101 per barrel, up 4.3%.

Western central banks, including the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, and the Swiss National Bank, announced that they will make coordinated efforts to ease pressure on European banks. They will do so by loaning the European Central Bank (ECB) dollars, who will then in-turn loan them to European banks. This improves liquidity, unclogs European credit markets, and allows European financial institutions to make loans in U.S. dollars. It also gives them the ability to pay back loans to U.S. financial institutions.

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