* S&P; 500 ends quarter with gain of nearly 6 percent
* Chicago PMI weaker than expected
* U.S.-listed shares of RIM rally on results, Nike drops
* Consumer spending rises in August on gas prices
* Dow off 0.4 pct, S&P; off 0.5 pct, Nasdaq off 0.7 pct
By Edward Krudy
NEW YORK, Sept 28 (Reuters) – Wall Street closed its best
third quarter since 2010 after a wave of central bank actions
sparked a dramatic reversal in equity markets, but signs of
weakness in the economy drove stocks lower on Friday.
The S&P; 500 climbed 5.9 percent over the past three months
as central banks geared up to boost liquidity to markets and
kick-start their flagging economies. The move has lifted the
benchmark index as much as 17 percent this year, recently
pushing the S&P; to its best level in five years.
But on Friday, investors grappled with more disappointing
U.S. economic data as business activity in the U.S. Midwest
contracted for the first time since 2009. The news came on the
heels of other weak regional manufacturing reports and a sharp
drop in U.S. durable goods orders last month. ID:nL1E8KS5D8]
“The reality is that the fundamentals of the market
certainly don’t support a 17-plus-percent run-up year to date,
but with all the QE (quantitative easing) action, that has had a
huge, huge impact,” said Oliver Pursche, president of Gary
Goldberg Financial Services in Suffern, New York.
The Dow Jones industrial average fell 48.84 points,
or 0.36 percent, to close at 13,437.13. The Standard & Poor’s
500 Index lost 6.48 points, or 0.45 percent, to finish at
1,440.67. The Nasdaq Composite Index dropped 20.37
points, or 0.65 percent, to close at 3,116.23.
For the third quarter, the Dow rose 4.3 percent and the
Nasdaq climbed 6.2 percent.
For the month of September alone, the Dow gained 2.6 percent
and the S&P; 500 rose 2.4 percent, while the Nasdaq advanced 1.6
percent.
In contrast, the trend for the week was down, with the Dow
off 1.1 percent, while the S&P; 500 shed 1.3 percent and the
Nasdaq dropped 2 percent.
In Friday’s session, stocks came off their lows after
Spanish bank stress tests were released, and were mostly within
expectations. The independent audit showed banks will need 59.3
billion euros ($76.3 billion) in extra capital to ride out a
serious downturn.
But Spain still remains mired in difficulties. Moody’s
review of the country’s credit rating, due later in the day,
could add to its challenges. On Thursday, ratings agency
Egan-Jones cut Spain’s sovereign rating further into junk
status, citing the country’s faltering banks and struggling
regional governments.
The euro fell against the dollar on Friday, declining for a
second straight week, as uncertainty persisted about Spain’s
prospects for receiving a bailout to prop up its ailing banks.
Recent protests in Spain and Greece against austerity plans
have also heightened investors’ concerns as the turmoil could
impede political maneuvering.
On the earnings front, U.S.-listed shares of Research in
Motion jumped 5 percent to $7.50 a day after a
smaller-than-expected quarterly loss.
Pledges by the European Central Bank, the Federal Reserve
and the Bank of Japan to buy government bonds helped cement a
summer rally in stocks and commodities.
But markets have lost some of their luster after the
announcements from the central banks in the first half of
September. After pulling back 1.7 percent over the last two
weeks, the S&P; 500 is now up 14.6 percent so far this year. The
S&P; 500’s drop of 1.3 percent this week is its worst weekly
decline since the start of June.
The coming months hold a series of difficult challenges for
markets, including third-quarter earnings season, which is
expected to show the first drop in earnings since 2009, and the
U.S. presidential election in November.
Trading was light on the quarter’s last day, when money
managers reposition their portfolios. About 6.15 billion shares
changed hands on the NYSE, Amex and Nasdaq, compared with the
average daily volume of 6.38 billion.
Reflecting the defensive tone, nine of the 10 S&P; sectors
fell. Only the S&P; utilities index was positive, up just
0.5 percent.
The decline in the S&P; technology sector index was
limited, as Accenture PLC climbed 7.1 percent to $70.03.
Accenture’s gain followed its forecast of full-year earnings
higher than analysts’ estimates as the company bolsters its
outsourcing business.
Nike Inc warned of slowing orders in China, becoming
the latest company to sound a note of caution about how economic
weakness in the world’s second-largest economy was affecting its
business. Nike’s stock fell 1.1 percent to $94.91.
