US stocks outperformed major markets across the globe in 2011 as the S&P 500 made it past the finish line on Friday virtually unchanged after one of the most volatile years on record.
With investors abandoning their longtime favorites, the emerging markets, and with Europe’s bourses mired by the eurozone crisis, Wall Street came in as an investor sanctuary, even if net gains were nothing to shout about.
Despite a late-session drop on Friday, the Dow Jones Industrial Average — the top 30 blue chips — managed to come in with a 5.6 percent gain for the year, ending at 12,217.56.
The broad-based S&P 500 ended where it started, off by a small fraction to 1,257.60.
And even the tech-heavy NASDAQ Composite held together enough to register just a 2.2 percent loss.
Compared with the Nikkei’s 17 percent fall, a 19 percent drop in Hong Kong, 25 percent in Bombay and 18 percent in Brazil and the 18 percent loss for the blue chips of the Euro STOXX 50, the US was the best destination for investors last year.
However, US markets only barely made up their steep losses in the fourth quarter, as economic growth appeared to regain its footing while economies elsewhere slowed and Europe sank further into crisis.
“Although investors may not have scored the absolute return that they wanted, the stock market still exhibited relative strength, while most of the world’s other major equity averages suffered double-digit percentage declines in 2011,” Briefing.com said in a review of the year.
The markets were helped by a solid recovery in US corporate earnings, including the banks and auto industry. Profits were up on average 13 percent and many companies built up cash piles or bought back shares as they girded themselves for more challenges in the new year.
Markets were also helped by the US Federal Reserve, which kept interest rates near zero for the third straight year, and by aversion to other currencies, especially the euro.
Even so, because of investor skittishness, Briefing.com said, “stocks remain extremely cheap on a relative basis.”
Last year, volatility on the S&P 500 was higher than all but four of the past 31 years: only the crash years of 1987, 2002, 2008 and 2009 were rockier.
Analysts are marginally optimistic about this year, with much depending on whether the US economy can sustain and add to its feeble pace of expansion.
“The market continues to be held in check by ongoing risk, most of it associated with other parts of the world, in this case Europe,” Hugh Johnson of Hugh Johnson Advisors said. “Next week I cross my fingers ... I think they are going to be good reports for the US economy and that might help the US markets next year.”