2011: A Crazy Year for the Dow

As 2011 is now just a memory, it's worth it to take a peek at our investments to see what's working and what's not.

That's what we aim to do today as we pull out the instant replay and consider the year that was for the Dow Jones Industrial Average (INDEX: ^DJI  ) .

Dow Jones Industrials Stock Chart

Dow Jones Industrials Stock Chart by YCharts

Dec. 31, 2010 11,577.51
Dec. 31, 2011 12,217.56
Change +630 points (5.53%)

What happened to the Dow in 2011
Things were going fine for the Dow at the beginning of the year, with the Dow up 4% by early March. However, with the devastating earthquake and tsunami that hit Japan on March 11, the Dow plunged to erase the gains. It quickly recovered, and in April the index hit its high of the year: 12,876.

The Dow teetered through the rest of April and May as the government argued over spending bills and the debt ceiling. The government was forced to find a solution or risk default on Aug. 2. In late July, as the deadline came nearer, the Dow started falling. Even though Congress had months to come to an agreement, the deal came down to the wire and the markets weren't pleased. Just three days later, credit-rating agency Standard & Poor's announced that it had downgraded the U.S. from AAA to AA over concerns of political uncertainty.

This whole debacle resulted in a plunge for the Dow of 15% from late July to the aftermath of the downgrade. Throughout the rest of the fall, the Dow was very volatile and only began its sustained rise in late October. Despite a final hiccup in November, the Dow finished up 5.5% for the year.

Top components
The results were extremely varied for the top and bottom performers. Follow the links for detailed reviews of each company's performance in 2011.

Top Gainers

McDonald's 30.71% What happened in 2011
IBM 25.29% What happened in 2011

Source: S&P Capital IQ.

Top Losers

Bank of America (58.32%) What happened in 2011
Alcoa (43.79%) What happened in 2011

Source: S&P Capital IQ.

Foolish bottom line
I'm not going to predict what the Dow will do in 2012, I'll leave the bold predictions to our chief investment officer. He Identified one company as the No. 1 stock for 2012. Find out which stock in our brand new-free report: "The Motley Fool's Top Stock for 2012." I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company. 

Dan Dzombak owns shares of Bank of America, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of IBM and Bank of America. Motley Fool newsletter services have recommended buying shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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