At the start of the month, the markets slowly added onto the strong rally experienced over January on better economic data, such as gains in construction spending and manufacturing.
However, the trouble started after the Fed hinted at an eventual unwinding of accommodative policies due to the improving economic conditions. A stalemate in Italy’s elections threw the markets in turmoil as investors hunkered down on talks of another Eurozone crisis in the making. Moreover, market observers were getting jittery with no definitive resolution to the sequestration deadlines and potential cuts across government programs. [ETFs Spike Above 30% of Market Trading as Euro Fears Return]
Nevertheless, stocks strengthened in the final days of the month after Ben Bernanke reassured the markets that the Fed would not ease off stimulus, at least anytime soon.
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Max Chen contributed to this article.