The S&P 500 generated a 12% return in the first quarter of 2012, rewarding intrepid investors that took a chance on riskier assets and put money to work in the stock market in 2012. (For more, see Earning Forecasts: A Primer.)

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The Winners
Sears Holdings (Nasdaq:SHLD) bounced back from an abysmal performance in the final quarter of 2011, and doubled investors' money, returning 109% in the quarter.

The quarter did not start well for Sears Holdings, as the company was plagued by reports that CIT Group (NYSE:CIT) and other retail factoring companies had declined to provide short term loans to vendors that sell to the company.

After that, Sears Holdings began a huge upward trend, moving from below $30 per share to a high of $87.66. This rally ended in mid-March 2012, when the stock hit technical resistance and investors took gains.

Several other fallen stocks rebounded strongly in the first quarter of 2012, after being abandoned by investors in 2011. Bank of America (NYSE:BAC) and Netflix (Nasdaq:NFLX) were up 74 and 64%, respectively, in the first quarter of 2012.

Bank of America benefited from investors' perception that issues regarding European sovereign default have been temporarily resolved, as well as positive results of a Comprehensive Capital Analysis and Review (CCAR) conducted by the Federal Reserve.

The CCAR indicated that most large banks would have adequate capital under a hypothetical adverse economic scenario. These assumptions included a peak unemployment rate of 13%, a 50% decline in equity prices, and a 21% drop in housing prices.

This news lifted most bank shares during the quarter, with JP Morgan (NYSE:JPM) and Citigroup (NYSE:C) both moving up 40% in the quarter.

Whirlpool (NYSE:WHR) was up 61% in the quarter, with the performance generated by several positive events. The company signed a deal with Suning Appliance Co., Ltd., to distribute its merchandise through Suning's 1,700 retail outlets in China. Whirlpool hopes that access to this distribution channel will grow appliance sales in China to $1 billion.

Later in the quarter, Whirlpool reported fourth quarter of 2011 earnings that exceeded consensus estimates. The company also provided guidance for 2012 that was above what most investors were expecting.

The Bottom Line
The S&P 500 was up 12% in the recently ended quarter, providing the index's best first quarter return since 1998. Investors now need to decide whether this is the start of a great year in the market or the last gasp of a recent rally that will soon reverse. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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