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Markets enjoyed a strong first quarter underpinned by economic improvement, robust corporate earnings and significant merger and acquisition (M&A) activity. Continuation of the Federal Reserve’s accommodative monetary policy further encouraged investors to move assets into equities. Even in the wake of challenging geopolitical and economic developments, and in a notable contrast to 2009 and 2010, investor sentiment has proved resilient.
In 2010, the Great Recession, which many economists consider the worst financial crisis since the Great Depression, officially ended. Market corrections in the first, second and third quarters marked the volatile path to recovery. The turning point came in September: economic data and other market events put fears of a double dip recession to rest.
Volatility in the equity markets provided a bumpy ride for investors in the third quarter. In July, the market recovered from June lows on surprisingly strong corporate earnings. In August, disappointing economic data ignited fears of a double‐dip recession. The equity markets fell with little regard to the strength of individual companies. In September, the market reversed course again as promising economic data strengthened investor confidence.