Dow wraps up wild month

NEW YORK – October is somewhat cursed for the stock market – the Crash of 1929, Black Monday in 1987, a slow-motion meltdown in 2008. This time, the demons made a last gasp, but Wall Street still managed to break the jinx.

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

But the finish sure was ugly. The Dow Jones industrial average fell 276 points and finished below 12,000 on the final day of the month. It was as rough an end as it was a beginning: On the first trading day of October, the Dow lost 258.

Still, even counting the Halloween scare, October 2011 will be remembered on Wall Street for a comeback that only the St. Louis Cardinals, baseball’s nearly eliminated, newly crowned champions, could match.

For the month, the Dow rose more than 1,000 points. It gained 9.5 percent, its best showing since October 2002. The Standard & Poor’s 500 index, the broadest major market average, rose 10.8 percent for the month, the best since December 1991.

On Oct. 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 were worried that the United States, with an economy growing at the slowest pace since the end of the Great Recession, was on the brink of falling back into recession.

And if the U.S. didn’t tip into a new recession by itself, the market was worried that Europe would give it a push. Greece and other European nations face crushing debt, and European banks that loaned them money face big losses.

Reports that European leaders were working on a debt plan began trickling out. Investors gained confidence after the leaders of France and Germany pledged to come up with a far-reaching resolution by the end of the month.When European leaders finally unveiled a deal Thursday, stocks roared higher. The S&P 500 jumped 3.7 percent and was up for the year for the first time since Aug. 3, just before the U.S. government’s debt lost its AAA credit rating.

With the October books closed, the Dow was at 11,955.01, up about 83 percent from March 2009, its lowest point after the financial meltdown. It would have to rise more than 2,200 points from here to set an all-time high.

The S&P 500 finished the month at 1,253.30, down 32 points on Monday, or 2.5 percent. The Nasdaq composite index fell 53 points for the day, or 1.9 percent, and ended October at 2,684.

Besides the Depression-heralding collapse in 1929, the crash in 1987 and the meltdown of 2008, the stock market suffered through a mini-crash on Friday the 13th in October 1989 and a 554-point drop in the Dow on Oct. 27, 1997.

But the month “turned the tide” in 11 bear markets after World War II, according to the Stock Trader’s Almanac. And it turned out to be the best single month for the market from 1993 to 2007.

Strong as it was, this October wasn’t close to ranking as one of the best. After the 1929 crash, the market routinely ran up much bigger percentage gains. In July and August 1932, for example, the market gained more than 36 percent each month.