NEW YORK (TheStreet) -- There's been record volatility for the stock market this year -- a near-bear market and a big jump in the past three months -- but the Dow Jones Industrial Average is on track to post a gain of about 8%, its historical average.

Shell-shocked investors have been whipped back and forth, mostly by political posturing in Europe and in Washington D.C. Fluctuating signs on the U.S. economy and corporate earnings gave no clear indications. The Dow peaked at the end of April, reaching 12,810, before Greece resurfaced as the debt-laden

enfant terrible

of Europe that made the whole world suffer. And investor sentiment soured as U.S. debt was, to some, inexplicably downgraded from triple-A, leading to a market bottom Oct. 3 at 10, 655.

We've worked our way back to a tenuous gain this year -- with today as the last trading session of 2011 -- on hopes there's a pending solution to the European debt crisis and as improving economic reports suggest the U.S. is, in fact, recovering.

That's a brief overview of what happened in 2011. Now let's take an in-depth look at what happened from January through December.

January

Dow Jones Performance:

+2.7% to 11,892

The year started with momentum as solid fourth-quarter 2010 earnings reports were released from the likes of

General Electric

(GE) - Get Report

,

IBM

(IBM) - Get Report

,

Apple

(AAPL) - Get Report

and

McDonald's

(MCD) - Get Report

.

The global economy appeared to be getting back to normal with increases in factory production, retail sales and existing-home sales improving in the U.S. The market gave back some gains toward the end of the month as violent clashes in Egypt made investors nervous and pushed up oil prices.

February

Dow Jones Performance:

+2.8% to 12,226

Upward momentum continued into February as the remainder of earnings releases were mostly positive, jobless claims were better than expected and the release of the Federal Reserve's FOMC meeting minutes that raised the outlook for economic growth in the year.

Policymakers increased their projections for gross domestic product to between 3.4% and 3.9%, up from the 3% to 3.6% estimate in November 2010. The Dow reached 12,391 on Feb. 18, almost a two-year high. The violence of the Arab Spring in North Africa and Egypt drove oil prices close to $100 per barrel, hurting stocks. Volatility then returned to the 20s (as measured by the VIX) in the last week of the month, causing the Dow to give back some of its earlier gains.

March

Dow Jones Performance:

+0.8% to 12,320

March was marked by a tragic 8.9-magnitude earthquake in Japan that unleashed a 23-foot tsunami that hit the eastern coast March 10 and resulted in a nuclear crisis. The Dow began a downward movement after the natural disaster got worse, on concerns the U.S. and the global economy could slow. The Arab Spring also continued to greatly influence markets and oil prices.

But as signs of a global recovery became apparent, including a solid GDP report in the U.S. (3.1% in 4Q 2010), the market rebounded and ended up 0.8% for the month.

April

Dow Jones Performance:

+4.0% to 12,811

The Dow rallied in April to the highest level in three years on the back of solid first-quarter earnings from a number of companies, including

Intel

(INTC) - Get Report

,

IBM

(IBM) - Get Report

,

United Technologies

and

Ford

(F) - Get Report

.

Consumer confidence brightened, and the Fed confirmed plans to complete QE2 -- the $600 billion program to buy Treasuries -- by June and keep interest rates low for an "extended period." All told, a slew of strong earnings drove the bull market in April.

May

Dow Jones Performance:

-1.9% to 12,570

The debt crisis in Greece re-emerged in May after a rescue package provided to the country in 2010 failed to restore financial health. Investors began to accept that Greece was going to default on its debt and realized that the European debt crisis was worsening.

That, coupled with economic data that turned negative -- e.g. the U.S. unemployment rate advanced to 9.1%, consumer confidence declined sharply, housing starts unexpectedly declined, and industrial production stalled -- dragged down markets. In addition, the downtrend in economic data led to increased concerns of what would happen after QE2 was completed at the end of June.

At that time, it was announced that the European Union was working on a second rescue package to save Greece from default, helping stocks to surge at the end of the month.

June

Dow Jones Performance:

-1.2% to 12,414

The market decline that began in May continued in June.

More weak economic data were released in the U.S., and Fed Chairman Ben Bernake said the U.S. recovery was slowing, but he offered no new stimulus.

The European debt crisis was beginning to escalate, Moody's warned of the potential downgrade of 13 Italian banks, and the focus on Greece and the possibility of contagion concerned investors.

Then, in the last week of the month, it became clear that Greece was making progress as it passed austerity measures and asset sales to meet European Union aid requirements. Also, the view that some of the negative trends in U.S. economic data had been overblown after

Nike

(NKE) - Get Report

beat earnings estimates, highlighting a healthy consumer, and some economic statistics came in better than expected, gave rise to expectations that the Fed's prognostications were coming true.

July

Dow Jones Performance:

-2.2% to 12,143

In July, it was more of the same old economic mixed bag accompanied by a European debt hangover. But as the month progressed, it was the deadline for an agreement on raising the U.S. debt ceiling and devising a plan to cut the $14.3 trillion deficit of Aug. 2 that whipsawed the Dow.

S&P, Moody's and Fitch all warned of a downgrade to the U.S.'s AAA credit rating if a decision wasn't made soon. That, coupled with what seemed to be a political stalemate, drove markets sharply downward at the end of the month.

August

Dow Jones Performance:

-4.4% to 11,613

August was characterized by huge swings up and down (400-point moves) in the Dow. The debt-ceiling deadline quickly approached, and, at the last minute, President Obama signed into law a plan to raise the debt limit until 2013 to avoid a default.

But the damage had been done, and legislation came a little too late. Standard & Poor's downgraded the U.S. credit rating one notch to AA+ with a negative outlook -- of historical proportions.

Speculation for a recession increased, and, as weak economic data was announced, investors began to believe that the Fed would introduce more stimulus into the economy -- dubbed QE3-- driving the market higher. Though that stimulus wasn't offered after the Fed's meeting in Jackson Hole, Wyo., at the end of the month, Chairman Ben Bernanke assured the American people that the economy wasn't deteriorating significantly and the Fed had the tools to generate growth.

September

Dow Jones Performance:

-6% to 10,913

There was a downtrend in the Dow at the beginning of the month, driven by a potential insolvency in Greece.

Finland was demanding collateral for its backing in the rescue, and Germany asked for veto power over the rescue fund. Mid-month, the market swung back up after the European Central Bank, the Federal Reserve and three other central banks offered European banks dollars via three medium-term loan operations to ensure they had enough collateral to operate smoothly.

Then the markets took a deep dive on a statement by the Fed's Bernanke that there was significant downside risk to the economic outlook -- in contrast to his rosy outlook at the beginning of the year. At the same time, "Operation Twist" was announced in the U.S. to help keep borrowing costs low, signaling to investors that there was a chance the U.S. could fall back into a recession.

Finally, at the end of the month, speculation that Europe would announce a plan to stem the crisis at an Oct. 6 meeting began circulating. That helped to pare losses for the month, but September still ended up being the worst-performing month for the Dow.

October

Dow Jones Performance:

+9.5% to 11,955

It was the worst of times, it was the best of times. In October, the market rallied on better-than-expected earnings and economic reports from the U.S. and increased confidence that European leaders would do what it takes to solve the sovereign debt crisis.

The market bottomed Oct. 3 after Greece announced it would miss deficit-reduction targets and the German Finance Minister opposed moves to increase the eurozone rescue fund. But a fierce upward trend followed.

The Dow gained momentum after France and Germany pledged to support the European banking system early in the month. Slovakia was the last member of the union to approve the EFSF bailout facility mid-month and the Federal Reserve announced plans to maintain the option to employ additional asset purchases. Then a plan to recapitalize the European banks was announced, the EFSF was expanded to a whopping 1 trillion euros, and Greek debt holders agreed to a voluntary write-down of 50%.

But momentum was reined in on the last day of the month as Italy's borrowing costs increased and Greek Prime Minister George Papandreou announced he would put the new bailout package from the European Union to a referendum. If the vote didn't pass, the country would default on its debt.

November

Dow Jones Performance:

+0.8% to 12,046

The market swung up and down during the first half of November, depending on the tone of news out of Europe, but stocks took a major trend downward mid-month as Fitch brought to light the risk of contagion that Europe could have on American banks. Also, a German bond auction failed to be fully subscribed, pushing bond yields in the eurozone to even higher levels.

On top of that, the so-called Super Committee in the U.S. failed to agree on a deal to cut the budget deficit. As such, automatic spending cuts of $1.2 trillion would be implemented in 2013.

But we got a snap back into positive territory in the last few trading days of the month as strong Black Friday retail sales restored confidence in the U.S. More importantly, though, six central banks including the Fed, ECB, Canada, the U.K., Japan and Switzerland cut the cost of lending dollars via swap arrangements to European banks to help restore liquidity to the system.

December

Dow Jones Performance:

+2% to 12,287

So far, the Dow is up about 1% in December and 6% for the year. As has been the theme for most of the year, stocks have been up and down on economic data and news out of Europe.

After a summit of European leaders, the 17 members of the eurozone and other EU countries agreed to negotiate changes to the existing eurozone treaty to include tougher deficit and debt regimes. A first draft of the document has been sent out.

The U.S. drove the market up in the last few weeks of the month. Solid economic data, relating to housing, consumer confidence and durable goods, along with an agreement by the government to pass a two month payroll tax cut extension, restored investors' faith in the U.S. economy.

--

Written by Lindsey Bell in

New York.

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