The stock market continued to confound the skeptics in the third quarter, ending near its highs for the year, with many of the riskiest stocks leading the charge.
The rally that began in early spring gained steam over the summer as the market had its biggest quarterly gain since the fourth quarter of 1998. In many cases, the market’s leaders were stocks that investors had left for dead earlier in the year. One winner was MGM Mirage, up 88%, and another was Hartford Financial Services Group Inc., up 123%. American International Group Inc. nearly doubled, even though many long-term investors believe its shares are essentially worthless. In the bond market, too, the rule of thumb was low credit quality equals high returns.
The Dow Jones Industrial Average rose 1,265.28 points, or 15% to 9712.28, its best third quarter since 1939. Even after a 0.3% decline on the last day of the quarter, the Dow is up 48% from its March 9 low and up 11% this year, although still down 31% from its October 2007 record. The 28% gain over the past six months was the best performance since the two quarters ended in March 1987.