The S&P 500 (NYSE:SPY) fell 14% in the third quarter of 2011, as the market feared the dual threat of a Greek sovereign debt default and a renewed contraction in the global economy. Some cyclical stocks with leverage to global economic growth fell more sharply, as investors all headed to the exit at the same time.

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The Losers
Alpha Natural Resources (NYSE:ANR) was the worst performing stock in the S & P 500 in the third quarter of 2011, falling 59%. The stock drifted lower all quarter as investors slowly fled cyclical companies that were dependent on the growth of the global economy. Another blow to Alpha Natural Resources was delivered in mid September when the company unexpectedly cut coal shipment guidance for 2011 to a range of 102.5 million tons to 109.5 million tons. The company attributed the cut partly to reduced orders from Asia. Although this is just a slight reduction from the previous range of 104 million tons to 112 million tons, it acted as an accelerant of investors' worst fears on the economy and sent the shares down even further.

Netflix (Nasdaq:NFLX) is not even close to being a cyclical stock yet almost beat out Alpha Natural Resources as the biggest loser for the quarter. Netflix's damage was mostly self inflicted, as it announced that it would split the bundled DVD and streaming video services the company provided, into separate offerings. The company also raised the monthly price for the full service by 60%. Netflix faces intense competition from many quarters, including a fresh threat from Amazon (Nasdaq:AMZN), which just released a tablet computer that can be used to download movies. One interesting item to note on Netflix is that despite the carnage over the last three months, earnings estimates have been stable for the company. Analysts expect Netflix to earn $4.48 per share in 2011, up from $4.44 per share 90 days ago. Netflix ended the quarter down by 58%.

U.S. Steel (NYSE:X) and AK Steel Holding Corp (NYSE:AKS) also made the list, falling 50% and 56%, respectively, during the quarter. These two steel companies were pummeled along with the rest of the steel industry and the mining companies that supply them. Despite investor concern about the global economic picture, AK Steel Holding Corp announced a price increase for carbon flat-rolled steel products at the end of August.

First Solar (Nasdaq:FSLR) fell 50% in the third quarter, as the company suffered some collateral damage from the high profile bankruptcy of Solyndra, a private company that secured a government guaranteed loan. The industry is also suffering from falling margins, as average selling prices decline.

The Bottom Line
It was definitely the wrong quarter to own equities in general, as the market was down sharply on fears of Greek default and another recession. Investors that were long equities should count themselves fortunate to have avoided any of the stocks on this list. (For additional reading, take a look at Finding Profit In Troubled Stocks.)

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