October is cursed for the stock market

October is a bit cursed for the stock market - the 1929 crash, Black Monday in 1987, a slow-motion collapse in 2008. This time, the demons took a last breath, but Wall Street still managed to break the jinx.

Stocks had their best month for almost a decade, rising from their low point of the year in an almost uninterrupted four-week rally. The juice of most came from Europe, which seemed to finally find a strategy to tame the debt crisis.

But the finish was ugly. The Dow Jones Industrial Average fell 276 points and finished below 12,000 on the last day of the month. It was as an end it was a rough start: On the first trading day of the month, October 3rd, the Dow lost 258.

Bank stocks were hit hard Monday. MF Global, a securities firm led by former New Jersey Governor Jon Corzine, filed for protection against bankruptcy. Rating agencies downgraded from the company last week, worried that she has too much debt in Europe.

Yet, even with the fear of Halloween, October 2011 will be remembered on Wall Street for a comeback that only the St. Louis Cardinals, baseball is almost eliminated, new champions, could not match.

For the month, the Dow was up over 1,000 points. He won 9.5 percent, its best performance since October 2002. The Standard & Poor 500, wider than the average of the major markets increased by 10.8 percent for the month, the best since December 1991.

On October 3, both the Dow and the S & P closed at their lows of the year. The market had been through a brutal summer and was one bad day away from falling into bear market territory, down 20 percent from its most recent peak.

Investors fear that the United States, with an economy growing at slowest pace since the end of the Great Recession, was about to fall into recession.

And if the United States did not switch to a new recession itself, the market was worried that Europe would give it a boost. Greece and other European nations face crippling debt, and European banks that lent money against large losses.

A recession in Europe would be bad news for the U.S. because Europe buys about 20 percent of U.S. exports.

Someone opening a quarterly statement to that time he had thrown away and was afraid to look again. But that day was to be the turning point.

Reports that European leaders have been working on a plan of debt began to escape. Investors gained confidence after the leaders of France and Germany has promised to come with a resolution of major by the end of the month.

Added to the news on Europe: strong corporate earnings from the likes of Google and McDonald and signs the U.S. economy was not as bad as feared. Retail sales rose 1.1 percent in September, the biggest gain in seven months.

When European leaders finally unveiled the matter Thursday, stocks roared higher. The S & P 500 jumped 3.7 percent and is up for the year for the first time since Aug. 3, just before the U.S. government debt lost its AAA credit rating.

"It's a rally all that was a very pessimistic vision of the world economy," says Todd Henry, a specialist emerging markets equity in T. Rowe Price. "Does it have legs? I think it remains to be seen. "

According to the agreement of the debt, banks will have a loss of 50 percent on their Greek government bonds. Europe will also add money to a bailout fund to protect others. And banks will increase their capital reserves to protect themselves.

With the books closing in October, the Dow was at 11,955.01, up about 83 percent in March 2009, its lowest point after the financial meltdown. It would have to increase by more than 2200 points from here to set a record.

The S & P 500 ended the month at 1,253.50, down 32 points Monday, up 2.5 percent. The Nasdaq composite index fell 53 points for the day, or 1.9 percent, and ended in October 2684.

Besides announcing the collapse Depression in 1929, the 1987 crash and the collapse in 2008, the stock market suffered a mini-crash on Friday 13 October 1989 and a decrease of 554 points the Dow Jones October 27, 1997.

But the month "turn the tide" in the 11 bear markets after World War II, according to the Stock Trader's Almanac. And it proved to be the best month for the single market from 1993 to 2007, according to the almanac.

Strong as it was, that October was not close to ranking as one of the best. After the 1929 crash, the market regularly ran much larger percentage gains. In July and August 1932, for example, the market gained more than 36 percent each month.

Concerns about a second recession fell slightly. The government announced last week that the economy in July, August and September grew at an annual rate of 2.5 percent, more than twice the speed of earlier this year.

The debt crisis in Europe is still far from fixed. A worrying sign is that borrowing costs for Italy and Spain have increased, a signal that traders are worried about the ability of these countries to pay their debts.

And there are problems closer to home. A Congress "supercommittee" must find $ 1.2 billion deficit in denominations less than a month, and Republicans and Democrats are fighting about whether to focus on higher taxes or cuts in federal spending .