Stocks statred off the week on Monday with another sizeable loss through much of the day, but an afternoon report that China is considering buying Italian government debt to stabilize the beleagureed southern European country sent stocks to a moderate gain for the day. The tech sector led the way on Tuesday as stocks logged back-to-back gains. On Wednesday the Dow gained another 140 points after news that talks by European leaders to disucss Greece’s debt might lead to a solution to its debt problem. Stocks extended their winning streak to four days on Thursday with a large gain as further relief over at least the short-term stability of European debt gained traction. On Friday stocks made it a perfect five-for-five for the week as the momentum from previous days carried over to the end of the week. [table id=28 /]

The market opened the holiday-shortened week down sharply following a sell-off in the European markets the previous day. Still, stocks recovered some of that loss later in the day in response to a positive US nonmanufacturing activity report. On Wednesday stocks rebounded strongly following a German legal ruling that bailouts of struggling EU members is legal. The Italian senate also approved an austerity plan. However, on Thursday the markets gave back another 1% after the European Central Bank did not give a particularly glowing growth forecast for the near future. The slide escalated on Friday with the Dow losing over 300 points on a bevy of troubling news. Investors were not happy with the resignation of a key European Central Bank board member or with Preisdent Obama’s proposed job plan. [table id=27 /]

Hurricane Irene failed to keep Wall Street closed on Monday, and investors responded by sending stocks sharply higher on relief that the storm was not as destructive as predicted. On Tuesday the market recovered from a morning swoon to finish with a small gain after news that the Fed is considering quantitative easing to stimulate the economy. A very rocky August ended on Wednesday as the Dow edged into positive territory for the year. Still, the 4.4% monthly loss for the Dow was the worst for the month of August in a decade. On Thursday stocks ended a 4-day winning streak and closed down over 1% on concerns over Friday’s upcoming job report. Those fears were borne out on Friday as new job creation effectively ceased in August, raising the specter that a double dip recession is at hand. The Dow dropped over 250 points, an ominous start to the historically worst month of the year for the stock market.

Early gains in the week partially offset the slide on Thursday and Friday.
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Stocks experienced another volatile ride on Monday before finishing with a modest gain, as investors tried to rally the market from a 4-week, 15% slide. On Tuesday, the Dow soared over 300 points despite a lack of positive economic news. While seemingly paradoxical, the possibility that poor economic news will lead to the easing of monetary policy by the Fed sometimes leads to a “bad news equals good news” investing mentality. Stocks continued up strongly on Wednesday, as gold fell abruptly from its recent high to below the $1800 an ounce mark. The market gave back some of its weekly gains on Thursday with a sizeable loss despite Warren Buffett’s decision to invest $5 billion in Bank of America, as investors are having doubts that Fed Chair Bernanke will enact quantitative easing in the near future. Another wild ride on Friday eventually led to big gains on Friday as Bernanke gave encouraging words for the economy while not announcing any additional stimulus plans.

Stocks broke a horrendous 4-week slide with a strong bounce back this week.
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An uptick in merger activity on Monday propelled stocks upward, as the Dow gained back all the losses from the S&P US debt downgrade on August 5. Stocks slid about a percent on Tuesday on disappointment over how European officials plan to solve their debt woes. On Wednesday, the markets were largely unchanged despite several companies such as Target and Staples posting positive earnings reports. Fear returned once again on Thursday, causing a 400+ drop in the Dow following a host of negative US economic reports. Gold hit an all-time high at more than $1800 an ounce. On Friday, stocks made early gains in the morning before dropping another 1.6%, as the threat over a double-dip recession seems to be growing.

Stocks had another difficult week, with small cap stocks once again being battered more than large-cap stocks.

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On Monday, stocks reacted most unfavorably to the S&P decision to downgrade US debt to AA+ from AAA+ the previous Friday, as the S&P 500 index dropped almost 7%, and the Dow dropped below 11000. Investor panic caused volatility to spike to its highest level since the “Flash Crash” of May 6, 2010. While the volatility remained on Tuesday, stocks eventually soared on a roller coaster day that saw the Dow swing 600 points throughout the day. A Fed statement that interest rates would remain low through mid-2013 initially sank stocks, but the major indexes recovered with a bang in the final hour of trading. These gains, however, were wiped out and more on Wednesday with a 520 point loss for the Dow over concerns regarding French banks and European debt. It was the third consecutive day that the Dow experienced at least a 400 point move. On Thursday, stocks screamed up once again, as the Dow set a record for most consecutive 400+ point swings. Stocks settled some on Friday, as volatility and large intraday swings subsided on a lower volume day with the Dow gaining 125 points.

Despite the fall-out from the S&P debt downgrade and the extreme volatility, the markets lost a relatively small amount this week, with large-cap stocks faring better than small-cap stocks.

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