NEW YORK -- It was a stomach-churning summer that most investors would like to forget.
The U.S. lost its top-of-the-line credit rating for the first time. The financial system of Europe seemed ready to collapse. Money managers sifted through data for signs that the economy was about to slide into a new recession.
In the financial markets, the result was the most volatile three months since the depths of the credit crisis in 2008 and 2009. Investors had a hair trigger: On four straight days in early August, the Dow Jones industrial average swung more than 400 points.
As much as investors might like to put the summer of swings behind them, analysts say they should brace for more.
Even if the next corporate earnings season, in October, shows that companies are still making money, it may not be enough to calm the markets until the bigger questions about Europe are answered.
Europe's debt problems are "going to continue to overshadow everything else in the market until we have a resolution," said Stephen Auth, chief investment officer at Federated Investors.
The European Union is wrestling with crippling debt in a handful of nations. If those nations can't make payments, banks that hold their national bonds will suffer deep losses, and lending could tighten worldwide around the world, possibly leading to a widespread recession.
For now, investors can expect ugly quarterly statements. The Standard and Poor's 500 index, the basis for most mutual funds that invest in U.S. stocks, fell 14 percent over the three months that ended in September.
Riskier stocks fared even worse. The Russell 2000 index of smaller companies plunged 22 percent -- enough to meet the technical definition of a bear market for the first time since March 2009.
Investors overlooked fundamentals of individual companies and made bets on the whole market. On more than half the trading days since Aug. 1, more than 400 of the stocks in the S&P 500 rose or fell as a group, according to Bespoke Investment Group.
There have been 42 of these "all or nothing" days this year, a pace that would break the full-year record of 52, set in 2008. Perhaps the best investment over the quarter was the very thing everyone fretted about: U.S. government debt.
Treasury prices soared even after the S&P ratings service knocked American debt down one notch from the highest level on Aug. 5. On Sept. 22, the yield on the benchmark 10-year Treasury note hit a record low, 1.71 percent. Bond yields fall when prices rise.
The message: Investors valued safety over profits.
With all the uncertainty, the best bet seemed to be that the U.S. government would repay its debts, even if it meant lousy returns for investors.
Fears about the U.S. economy were heightened in September after the Federal Reserve said it believed that the economy has "significant downside risks" that will hamper a quick recovery, including high unemployment, a depressed housing market and slow growth in consumer spending.
The worst quarter for the stock market since the financial crisis ended on another down note. Stocks fell Friday on signs that Europe's debt and the U.S. economy continue to languish.
The S&P 500 and Nasdaq each lost more than 12% this quarter, the first time that's happened since the financial crisis crested at the end of 2008. The Dow dropped 1,500.96, or 12.1%, over the same time frame.