BOSTON – The stock market ended up going nowhere in 2011 despite a bumpy ride, and investors continued to hit the exits. For the fifth year running, they withdrew more cash from stock mutual funds than they put in.

Bond funds continued to attract new cash. It reflects that investors are risk-averse after the Standard & Poor’s 500 index produced an average annual loss of 1 percent in the last decade, including dividend income. Volatility remains a big fear, with the 2008 financial crisis still a fresh memory.

“People look at stock returns, and see they have been poor for the past decade, and they don’t want to play the game anymore,” says David Santschi, executive vice president with TrimTabs Investment Research.

In 2011, the S&P 500 index ended up almost exactly where it started the year, although it returned 2.1 percent factoring in dividends.

It was a market that investors continued to shun. They withdrew a net $85 billion from U.S. stock funds last year, industry consultant Strategic Insight said on Friday. The string of annual net withdrawals extends to 2007. Over that stretch, investors have removed a net total of $328 billion.

Bond funds have attracted about twice that much in new cash in just the past three years, including last year’s net deposits of about $116 billion.

Before the financial crisis of 2008, it was common for stock funds to take in twice as much new cash as bond funds in any given month. That pattern briefly returned a year ago, when stock fund coffers grew for four consecutive months to start 2011.

But that streak ended in May, and worries about slower economic growth and the European debt crisis mounted over the summer and fall. Economic news turned more positive in December, but it wasn’t enough get investors back into stock funds.

Strategic Insight said investors withdrew a net $24 billion from U.S. stock funds in December, the eighth consecutive month with more money flowing out than in. Bond funds attracted $13 billion in new cash in December.

Investors also retreated from funds investing in foreign stocks. Net withdrawals from those funds totaled $11 billion in December. Still, foreign stock funds ended the year with net deposits of $34 billion, reflecting expectations that China and other emerging markets such as India and Brazil continue to have good long-term prospects.

Americans’ recent caution about money extends beyond their investment decisions. Over the first 11 months of last year, net deposits into checking and savings accounts were about eight times as big as the net total flowing into stock and bond mutual funds and exchange-traded funds, TrimTabs said on Friday.

“The economy isn’t likely to get off to the races as long as investors are stuffing most of their money under the mattress,” TrimTabs’ Santschi said.

Since 2008, investors have been pulling money from stock funds even during periods when the market was recovering. Aversion to stocks has persisted despite low interest rates, which the Federal Reserve is maintaining as an economic stimulus. Those rates have encouraged borrowing, but make it nearly impossible to generate decent income from bank accounts and lower-risk segments of the bond market.

Still, not every investor is quite so anxious. Through it all, Justin Beal, of Clovis, Calif., has continued making regular contributions to an investment portfolio that’s 100 percent in stocks. The 38-year-old municipal fire inspector sold his bonds about three years ago, sensing opportunity in the stock market.

“At my age, I’ve looked at the market as a long-term buying opportunity,” Beal says.

After the market’s flat 2011 performance, Beal has recently been buying shares of companies that are selling at roughly the same price, or less, than they were at the start of last year. One of his current favorites is waste disposal company Waste Management Inc., whose share fell nearly 8 percent last year.

Beal’s parents, however, recently hit retirement age and are investing more cautiously, he said. That means cutting back on stocks, and shifting cash to bonds.

It’s a common move for many these days, as the oldest baby boomers hit their mid-60s.

“The boomers are taking a defensive stand,” Beal says, “because they just can’t afford that volatility.”

BOSTON – Investors again withdrew cash from stock mutual funds in November during another volatile month in the market.

Industry consultant Strategic Insight said on Monday that investors withdrew a net $16.1 billion from U.S. stock funds last month. It was the seventh consecutive month of net withdrawals. Since May, a net $113 billion has exited stock funds.

Stocks finished November down less than 1 percent. But Europe’s debt crisis continued to drive volatility, and the Standard & Poor’s 500 index lost 9 percent in mid-November before almost fully recovering by the end of the month.

Investors last month also retreated from funds that invest in foreign stocks. Those funds had net withdrawals of $2.6 billion.

Bond funds continued to attract cash in November, nearly $12 billion in net deposits.

NEW YORK (Reuters) – Stocks closed out the worst month in more than a year on an up note on Wednesday, with sharp gains in the last several days still not enough to repair the damage from a U.S. credit downgrade and fears of a slide back into recession.

Sentiment turned dramatically in recent days on expectations the Federal Reserve will again intervene to support the economy. With Wednesday's gains, the Dow was back in positive territory for 2011.

Banks led a late-day surge on Wednesday, helping to extend a four-day rally, followed by industrial shares. JPMorgan Chase & Co (JPM.N) rose 1.3 percent to $37.56 while Caterpillar Inc (CAT.N) was up 1.3 percent at $91.00.

Minutes from the most recent Fed policymakers' meeting released on Tuesday that indicated several Fed members favored more monetary easing bolstered the appetite for equities.

"The market has been somewhat schizophrenic lately, but the idea of more stimulus lets you put a rosy spin on everything," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Connecticut.

"Our rally has quieted down since the data wasn't great this morning, and we still don't know if that kind of weakness will be enough to trigger 'extraordinary action' from the Fed," he said.

Federal Reserve Chairman Ben Bernanke, at an annual Fed conference in Wyoming last week, said the U.S. central bank's scheduled meeting in September would run for two days instead of the planned one to mull options for additional monetary stimulus.

Data on hiring by private employers in August and factory activity in the U.S. Midwest released on Wednesday showed some signs of weakening growth.

The Dow Jones industrial average (.DJI) finished up 53.58 points, or 0.46 percent, at 11,613.53. The Standard & Poor's 500 Index (.SPX) was up 5.97 points, or 0.49 percent, at 1,218.89. The Nasdaq Composite Index (.IXIC) was up 3.35 points, or 0.13 percent, at 2,579.46.

The S&P 500 rose in seven of the past eight sessions for total gains of 8.5 percent, led by sectors tied to economic growth.

For August, though, the S&P fell 5.7 percent, its worst month since May 2010. The Dow fell 4.4 percent in August while the Nasdaq slumped 6.4 percent. It was the fourth straight down month for all.

Equities on Wednesday were volatile late in the session, turning briefly negative before snapping back into positive territory. Still, the volatility did not compare to early in the month, when Wall Street was marked by massive swings of more than 3 percent.

"The market has no conviction one way or the other, and the low volume exaggerates all the moves we get," said Carl Kaufman, who helps manage just under $2 billion at the Osterweis Strategic Income fund in San Francisco.

"We get some good numbers, but there are questions about the future, a lot of people are still seeking safety. The market is a zephyr in the whirlwind of headlines."

An index of factory activity in the U.S. Midwest slipped to its lowest level since November 2009, though the figures still pointed to manufacturing growth. A separate report showed private sector job growth slowed in August for a second straight month.

Tech shares weighed on the Nasdaq, with Apple Inc (AAPL.O) off 1.3 percent to $384.83 and chipmaker Nvidia Corp (NVDA.O) down 2.7 percent to $13.31.

Industrial stocks were among the top gainers, with the S&P industrials index (.GSPI) up 0.7 percent. Honeywell International (HON.N) gained 1.1 percent to $47.81 while Joy Global Inc (JOYG.O) rose 1.3 percent to $83.45. The company agreed to sell the drilling products business of recently acquired LeTourneau Technologies to Cameron International Corp (CAM.N) for $375 million.

Telecom stocks were the day's losers after the Obama administration filed to block AT&T Inc's (T.N) $39 billion proposed acquisition of T-Mobile USA from Deutsche Telekom (DTEGn.DE) because of anti-competitive concerns.

AT&T shares slumped 3.8 percent to $28.48, the biggest decliner on the Dow. The S&P Telecommunications index (.GSPL) dropped 1.6 percent, by far the biggest loser among S&P sectors.

New orders for U.S. factory goods rose more than expected in July as demand for transportation equipment surged, pointing to some resilience in manufacturing at the start of the third quarter.

Almost two stocks rose for every one that fell on the New York Stock Exchange, while on the Nasdaq slightly more stocks fell than rose.

About 8.2 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.

(Editing by Leslie Adler)

NEW YORK (Reuters) – Wall Street posted its first weekly gain in more than a month as Fed Chairman Ben Bernanke raised hopes for more stimulus for the economy at the U.S. central bank's September meeting.

Initially stocks fell after Bernanke stopped short of describing detailed plans to strengthen the ailing economy. But the market turned higher, led by technology shares, as investors concluded the Fed was leaving the door open for action even though many traders believe it has limited power to pull the economy out of a rut.

The CBOE Volatility Index or VIX (.VIX), Wall Street's "fear gauge," retreated after days of uncertainty on what Bernanke would say. The VIX slid 10.2 percent to 35.69, after earlier falling as much as 14 percent to a session low at 34.33.

"He didn't give the market the green light for QE3. He also didn't give the market the red light for QE3," said Kevin Caron, market strategist at Stifel, Nicolaus in Florham Park, New Jersey, referring to a possible third round of quantitative easing.

"By implying that inflation is viewed as not a concern, it leaves the possibility for something down the road," he said.

The Dow Jones industrial average (.DJI) ended up 134.72 points, or 1.21 percent, at 11,284.54. The Standard & Poor's 500 Index (.SPX) was up 17.53 points, or 1.51 percent, at 1,176.80. The Nasdaq Composite Index (.IXIC) was up 60.22 points, or 2.49 percent, at 2,479.85.

For the week, the Dow rose 4.3 percent, the S&P gained 4.7 percent and the Nasdaq rose 5.9 percent.

Bernanke, speaking in Jackson Hole, Wyoming, said the central bank's policy panel would meet for two days in September instead of the scheduled one-day meeting to discuss any more stimulus.

While expressing long-term optimism, Bernanke said the Fed found recent developments troubling and saw a low inflation as staying low.

Shares of property insurers were mixed after falling earlier in the week on worries that severe damage from Hurricane Irene would result in substantial claims.

Travelers Cos Inc (TRV.N) edged up 0.6 percent to $48.29 after earlier hitting a two-year low. Allstate (ALL.N) was up 0.1 percent at $24.45, having also hit a two-year low. Insurers typically fall before severe weather events and rally later.

Chubb Corp (CB.N) gained 1.2 percent to $59.38.

As Irene bore down on North Carolina, tens of thousands of people evacuated and East Coast cities, including New York, braced for a weekend hit from the powerful storm.

NYSE Euronext (NYX.N) said the New York Stock Exchange plans to open for trading as usual next week, but because of the possibility of flooding, a decision will not be made until Saturday or Sunday.

Technology stocks led the advance, with Cisco Systems Inc (CSCO.O), Microsoft Corp (MSFT.O) and Intel Corp (INTC.O) among the Dow's top gainers.

Cisco shares rose 1.6 percent to $15.32, while Microsoft shares added 2.8 percent to $25.25, and Intel Corp advanced 1.8 percent to $19.77.

The S&P information technology index (.GSPT) shot up 2.3 percent, making it the S&P 500's best-performing sector.

"It's a pretty broad market rally right now, but tech has been really hammered in the selloff, so you see that leading the rally," said Gary Wedbush, head of trading at regional investment bank Wedbush Morgan in Los Angeles.

Tiffany and Co (TIF.N) rose 9.3 percent to $69.01 after it raised its full-year profit outlook.

About 7.9 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, matching the year-to-date average of 7.9 billion.

On the New York Stock Exchange, advancers beat decliners by a ratio of about 5 to 1. On Nasdaq, about 4 shares rose for every 1 that fell.

(Additional reporting by Ashley Lau, Editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks suffered their worst day in nearly a month on Monday as concern about the stalemate in U.S. budget talks and growing debt problems in the euro zone prompted investors to hedge against further losses.

The S&P 500 dropped nearly 2 percent on concerns that Europe’s debt crisis would spread to Italy. European officials were still struggling to solve Greece’s fiscal problems as Italy’s markets have been roiled by worry about its banks.

“Today’s decline is not necessarily the start of a correction, but suggests we are in for a wild ride this week,”

said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

The euro zone’s woes added another layer of uncertainty to the stock market already rattled by Friday’s exceptionally weak jobs report.

“What’s happening today is something that should have happened on Friday. The disappointing jobs report on Friday on top of all the concerns on budget talks and Europe” have prompted the sell-off, Frederick said.

While investors still consider it unlikely there will be no deal on the debt, the lack of resolution at a time of growing international concerns weighed on sentiment. The CBOE Volatility Index (.VIX) or VIX, Wall Street’s barometer of investor anxiety, spiked 15.3 percent.

The Dow Jones industrial average (.DJI) was down 151.44 points, or 1.20 percent, at 12,505.76 at the close. The Standard & Poor’s 500 Index (.SPX) was down 24.31 points, or 1.81 percent, at 1,319.49. The Nasdaq Composite Index (.IXIC) was down 57.19 points, or 2.00 percent, at 2,802.62.

The S&P 500, which lost its gains for the month, was near its 100-day and 50-day moving averages, both around the 1,316 level. The Dow and the Nasdaq remained modestly in the plus column.

Dashing hopes for a deal on larger-than-expected spending cuts to tame the U.S. budget deficit, a highly anticipated Sunday meeting broke little new ground as President Barack Obama and congressional Republicans kept sparring over taxes. In a press conference, Obama called for the largest possible deficit-reduction deal.

ALCOA SHINES LATE

After the bell, Alcoa Inc (AA.N), often viewed as a bellwether of the U.S. economy, posted a big jump in second-quarter profit partly due to soaring prices for aluminum and its raw material alumina. The Dow component’s stock rose 0.3 percent to $15.96 in extended-hours trading.

For a video on the upcoming season, see: http://link.reuters.com/caw52s

During the regular session, financials and other economically sensitive stocks led the day’s broad decline. Bank of America Corp (BAC.N) lost 3.3 percent to $10.35 while Freeport McMoRan Copper & Gold Inc (FCX.N) slid 3.3 percent to $53.30. An S&P financial index (.GSPF) dropped 2.8 percent and ranked as the biggest loser among the S&P 500′s sectors.

Global equity markets fell and the cost of insuring Italian debt jumped to a record amid fears of contagion in Europe’s debt markets and reports some European Union leaders were considering allowing a selective default by Greece.

U.S. exchange-traded funds tracking European equity markets came under heavy selling pressure. The IShares MSCI Italy Index Fund (EWI.P), a fund that tracks Italian stocks, fell 6.2 percent while the MSCI Europe Financials Sector Index Fund (EUFN.P) lost 4.6 percent.

News Corp (NWSA.O) shares dropped 7.6 percent to $15.48 on heavy volume as Britain looked for a way out of approving the company’s multibillion-dollar deal to buy broadcaster BSkyB (BSY.L) amid a phone-hacking scandal.

Volume was light, with about 6.55 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s daily average of 8.47 billion.

About six stocks fell for every one that rose on the New York Stock Exchange. On the Nasdaq, nearly five stocks fell for every one that rose.

(Reporting by Angela Moon, Editing by Jan Paschal)

NEW YORK (Reuters) – Stocks suffered their worst day in nearly a month on Monday as concern about the stalemate in U.S. budget talks and growing debt problems in the euro zone prompted investors to hedge against further losses.

The Dow Jones industrial average (.DJI) dropped 151.44 points, or 1.20 percent, to end unofficially at 12,505.76. The Standard & Poor’s 500 Index (.SPX) lost 24.31 points, or 1.81 percent, to finish unofficially at 1,319.49. The Nasdaq Composite Index (.IXIC) fell 57.19 points, or 2.00 percent, to close unofficially at 2,802.62.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

NEW YORK – That screeching sound you heard in May? That was the stock market.

While the month ended with four days of gains in most of the indexes, concerns that high gas prices, tornadoes and flooding in the South, the post-natural disaster slowdown in Japan and a growing debt crisis in Europe sent the Standard and Poor’s 500 stock index down 1.4 percent in May. That decline followed a 2.85 percent gain in April, which followed gains that set the fastest pace in the first quarter since 1998. Before this month, stocks were boosted by higher corporate earnings, increased business spending and a global economic expansion.

May was the first down month for the S&P since August 2010.

Other risky assets also saw declines in May, following a year of increases. The prices of commodities like oil, cattle and coffee fell by an average of 7 percent. Meanwhile, Treasury bond prices, which tend to rise when investors fear that the economy is slowing, rose to near their highest level of the year.

For Tuesday, the stock market ended higher, on signs that Germany might drop its demands for an early rescheduling of Greek bonds, paving the way for a deal that could prevent Greece from defaulting on its debt. The S&P index gained 14.10, or 1.1 percent, to 1,345.20. The Dow Jones industrial average added 128.21, or 1 percent, to 12,569.79. And the Nasdaq composite rose 38.44, or 1.4 percent, to 2,835.30.

These gains came in spite of another grim report on the U.S. housing market. Home prices in in 12 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller index dropped in March to the lowest levels since the housing bubble popped in 2006. “Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, chairman of the index committee at S&P Indices.

Oliver Pursche, president of Gary Goldberg Financial Services, said the report didn’t hurt investors’ confidence much because their expectations for the U.S. housing market were already low.

“There’s no shock factor there,” Pursche said. “We knew it was going to be bad, and it is.”

Even so, the month of May was an unhappy one for stock holders for the second year in a row — although the losses weren’t nearly as bad as they were last year. Just like 2010, when the S&P index lost 8 percent in May, Greece said that it will need outside help from other European Union countries to meet its debt payments. And in the U.S., the domestic economy sputtered again. Thirteen economic indicators, ranging from personal spending to manufacturing orders, were weaker than economists had predicted, a sign investors and analysts say indicates that high gas prices are slowing growth more than anticipated.

Some investors believe that May was merely a short-term dip_and given the news of the month, markets could have seen bigger declines. “(Stocks) held up reasonably well this month, given all that the market had to digest in terms of worries,” said David Kelly, chief market strategist at J.P. Morgan Funds.

Kelly and others say that the lingering good feelings from a strong earnings season, where the average company beat Wall Street’s quarterly earnings expectations by more than 6 percent, was part of the reason the broad market didn’t decline further. Another reason, Kelly says is that the belief “in the market that any of the slowdown in the economy is relatively temporarily.”

One-time factors like bad weather and problems with getting parts from Japan, along with a sharp upturn in investments by private companies, all suggest that the economy will continue to grow this year despite recent signs of weakness, Kelly said.

The few industries that performed well in May were so-called defensive ones like health care and utilities that have stable earnings because the items they sell are not luxuries. Consumer staples — companies like PepsiCo and Costco Wholesale that sell everyday items like soda and diapers — rose nearly 2.5 percent, the most out of any group.

June should provide some answers as to whether the economy truly is slowing down. Economists expect that Friday’s jobs report will show that the unemployment rate fell to 8.9 percent in May from 9.0 percent in April. And at the end of the month, the Federal Reserve will end its bond-buying stimulus program, QE2. The program has kept interest rates low, which makes owning riskier assets, like stocks or commodities, more attractive.

Some investors believe that the end of the Fed’s stimulus program is already reflected in stock prices. “The market looks ahead six to nine months, so if the market thought the end of QE2 was going to be harmful we would have felt it already,” said Peter Maris, the founder of Resource Financial Group, a financial adviser in Wilmette, Ill.

The S&P index has risen 7 percent this year, before dividends. At this point would take an 87.56 point drop for it to turn negative for the year. The Dow would need to drop 992.28 points to erase its 8.6 percent gain for the year.

NEW YORK (Reuters) – Stocks rose on Friday on strength from Caterpillar and other industrials, lifting the Dow and Nasdaq to their best monthly performance since December.

Heavy machinery manufacturer Caterpillar Inc (CAT.N) led the way after reporting a fivefold increase in profit and raising its full-year forecast.

“Now that earnings are coming in, the investment community is telling you that once some of these negative issues subside — sovereign debt, Middle Eastern tensions — this market is going to rip,” said Jason Weisberg, managing director at Seaport Securities Corp.

The blue-chip Dow average climbed 4 percent for the month while the S&P 500 rose 2.8 percent and the Nasdaq gained 3.3 percent.

“You take that entire mixture and the market took all of that simultaneously — they weren’t separate events — they were all concurrent. And we couldn’t blast the market below 12,000,” Weisberg said.

Concerns that the market would pull back after earnings are somewhat offset by favorable corporate outlooks and expectations for continued easy money policies from the Federal Reserve that have fueled runs in speculative assets.

April’s gains were limited by slides in Microsoft Corp (MSFT.O), the Nasdaq’s most heavily traded stock, and BlackBerry maker Research in Motion (RIM.TO)(RIMM.O).

Caterpillar gave the top boost to the Dow, advancing 2.5 percent to $115.41, after reaching an all-time high of $116.25 during the session. The S&P industrial sector index (.GSPI) added 0.3 percent. Caterpillar is up more than 20 percent so far this year, along with fellow industrial Boeing Co (BA.N).

Microsoft dropped 3 percent to $25.92 and was the biggest drag on the blue-chip Dow after it reported a drop in quarterly sales of its Windows software, mirroring a recent downturn in demand for personal computers. U.S.-listed shares of Research in Motion tumbled 14 percent to $48.65 after the BlackBerry maker cut its first-quarter forecasts.

The Dow Jones industrial average (.DJI) gained 47.23 points, or 0.37 percent, to 12,810.54. The Standard & Poor’s 500 Index (.SPX) rose 3.13 points, or 0.23 percent, to 1,363.61. The Nasdaq Composite Index (.IXIC) edged up 1.01 points, or 0.04 percent, to 2,873.54.

For the week, the Dow rose 2.4 percent, the S&P 500 gained 2 percent and the Nasdaq advanced 1.9 percent.

Merck & Co Inc (MRK.N) reported higher-than-expected quarterly earnings, fueled by strong sales of drugs for diabetes, asthma and rheumatoid arthritis, while Chevron Corp (CVX.N) reported a jump in earnings as oil prices surged.

Shares of Merck rose 0.45 percent to $35.95 while Chevron added 0.6 percent to $109.44. Both stocks are Dow components.

Robust corporate earnings, ample liquidity from the Federal Reserve and the prospect of ultra-low interest rates for the rest of the year have sparked bullishness, pushing the Nasdaq to a 10-year high and lifting the S&P 500 more than 8 percent this year. The major U.S. stock indexes also hit new yearly highs during the week.

The rebalancing by Nasdaq OMX (NDAQ.O) of its benchmark Nasdaq 100 index (.NDX) will take place on May 2, in which the exchange said it will cut the weight of 82 securities to bring them more in line with their market capitalizations. Apple Inc (AAPL.O) will see its weighting dropped to 12.3 percent from 20.3 percent.

With May, the market is heading into a typically weak period. May has been the fourth-weakest month for the Dow, averaging a 0.2 percent gain since 1950, according to the Stock Trader’s Almanac. It also normally marks the start of the worst six months of the year for the industrials.

Volume was light, with about 7.17 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 7.72 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,953 to 1,028, while on the Nasdaq, advancers beat decliners 1,417 to 1,146.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)