Meet the Supporting Cast

Meet the Supporting Cast - Meet the Supporting Cast Markets...

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Meet the Supporting Cast Markets Continued to Benefit From Intervention in 2010; Now, the Question Is, Can the Fed and Others Exit Neatly? By TOM LAURICELLA Financial markets of just about every stripe pushed higher in 2010, marking a second year of recovery from the financial crisis. U.S. blue chips ended the year up solidly, climbing above the point they were at before Lehman Brothers' collapse, but the ride there was anything but smooth As was the case in 2009, investors can thank continued, unprecedented efforts by governments and central banks around the globe to keep their economies and financial markets afloat for those good returns. At some point, governments will look to reverse their stimulative strategies as their economies and markets can stand on their own. But for now the betting is that in the U.S., Europe and Japan, at least, that support will continue for months to come. The benefits to investors could be seen in 2010. When major stock or bond markets faltered and ostensibly signaled alarm, policy makers responded aggressively with measures that, at least in the short term, directly or indirectly drove prices higher across a wide variety of asset classes. The most direct support came as central banks supported government bond markets in the U.S. and Europe. That then indirectly lifted corporate bond and stock markets. .
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U.S. stocks also got a boost in December thanks to an unexpected round of fiscal stimulus for 2011 in the form of extended and new tax breaks. The Dow Jones Industrial Average gained 11% to 11577.51, regaining levels last seen before the collapse of Lehman Brothers in September 2008. The Standard & Poor's 500-stock index, meanwhile, rose 12.8% to finish at 1257.64. The Dow, which finished less than eight points shy of its high for 2010, capped the year with a 7.3% gain in the fourth quarter and an 18.5% rise in the second half. With those gains, the Dow stood 76.8% above its 12-year low close of 6547.05 hit on March 9, 2009, but is still 18% below its all-time high of 14164.53 reached Oct. 9, 2007 Prices of economically sensitive commodities climbed as central banks in many emerging markets held off raising interest rates despite strong growth and building inflation pressures for fear of damaging the fragile global recovery. Copper prices, for example, rose 33% and crude-oil prices gained 15% to finish the year above $91 per barrel. The bet was that as
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Meet the Supporting Cast - Meet the Supporting Cast Markets...

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