Bloomberg News

Last-Second Lurch in S&P 500 Ends Bid for Third Year of Gains

January 01, 2012

Dec. 30 (Bloomberg) -- A two-point decline completed in the last seconds of trading sent the Standard & Poor’s 500 Index to a 2011 loss of 4/100ths of a point, ending a two-year streak of gains for the benchmark gauge of American equities.

The measure traded at an average price of 1,261.18 during the day and stood at 1,260 with 10 minutes left, up about 2 points from its Dec. 31, 2010, close of 1,257.64. It remained positive for the year with 15 seconds to go at 1,257.91 before slipping to 1,257.60 on the session’s last trades.

“There was a frenzy,” said Stephen Guilfoyle, who works on the floor of the New York Stock Exchange as U.S. economist for Meridian Equity Partners in New York. “You saw people breaking into a run, the old-school nervousness, some shouting. You see that nervousness when orders are coming in the last minute.”

The volatility was characteristic of a year in which stocks swung at a daily rate of twice the 50-year average after the S&P 500 reached a three-year high in April. From its peak of 1,263.61, the index plunged 19 percent through Oct. 3 and then climbed back to where it began the year.

This year’s move was the smallest since 1947 when the index closed exactly unchanged. Individual stocks were more volatile than in 2009 and 2010, with 55 losing more than 30 percent this year compared with a total of 13 in the prior two.

‘On a Rollercoaster’

“It’s almost like you’re getting on a rollercoaster, where you get on and it’s a wild ride, and you get off at the exact same point,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview.

About 4.1 billion shares changed hands on all U.S. exchanges today, the third-slowest full-day session of the year and 45 percent below the three-month average, according to data compiled by Bloomberg, as trading slowed before the New Year holiday.

The 2.6-point retreat between 3:50 p.m. and 4 p.m. was almost twice as big as the next largest decline for any 10- minute period during the day, data compiled by Bloomberg show. Volume during the period was at least 126 percent greater than in any other comparable interval before the close.

“It looks notable on a chart because the rest of the day was so lame and without any movement whatsoever,” Manoj Narang, founder and chief executive officer of Tradeworx Inc., an automated trading firm in Red Bank, New Jersey, said in a phone interview.

--With assistance from Ksenia Galouchko, Jeff Kearns, Chris Nagi and Inyoung Hwang in New York. Editors: Chris Nagi, Michael P. Regan

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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