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.)

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

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.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

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

Related Articles
  1. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  4. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  5. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  6. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  7. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  8. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  9. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  10. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center