Stocks seal 3Q gains despite bumpy final days

JOSHUA FREED

AP Busi­ness Writer

Stocks posted solid gains for the third quar­ter, although the ride got bumpy at the end.

Stocks fell five days of the last six, includ­ing on Fri­day, the last trad­ing day of the quar­ter. But the big indexes are still up 4 per­cent or more for the three months. They’re ahead 10 per­cent or more for the year.

That’s despite all the anx­i­ety about the euro, Iran and U.S. politics.

Actu­ally, those wor­ries are exactly why stocks are up, said Uri Lan­des­man, who runs the Plat­inum Part­ners hedge fund. He notes that investors around the world feel that U.S. stocks look pretty good, com­pared to some of the alternatives.

“Peo­ple are scared, and 2008 wasn’t that long ago, and Europe remains a prob­lem,” he said. Those fac­tors “are keep­ing the mar­ket up in the face of some really ques­tion­able eco­nomic data and ques­tion­able behav­ior by the Fed.”

Investors got some more of that iffy eco­nomic data on Fri­day. The Com­merce Depart­ment said con­sumer spend­ing rose a half-percent last month, com­pared with July. That was a big jump — but it was dri­ven by higher gas prices, rather than by spend­ing on cloth­ing, elec­tron­ics and gen­eral mer­chan­dise. Con­sumer spend­ing dri­ves nearly 70 per­cent of eco­nomic activity.

The news pushed stocks lower. The Dow Jones indus­trial aver­age fell 48.84 points to close at 13,437.13. The Stan­dard & Poor’s 500 index fell 6.48 points to 1,440.67. The Nas­daq com­pos­ite index fell 20.37 points to 3,116.23. The losses had been steeper in the morn­ing before stocks recov­ered some­what around midday.

Stocks fell in all indus­try groups in the S&P 500 except util­i­ties. Telecom­mu­ni­ca­tions and infor­ma­tion tech­nol­ogy stocks had the biggest losses.

Many investors worry that the recent gains by stocks aren’t jus­ti­fied, con­sid­er­ing the risks of a con­fronta­tion with Iran, weak cor­po­rate prof­its, and Europe’s troubles.

“Peo­ple are wrestling with that dis­con­nect, and try­ing to choose which chess pieces to move in antic­i­pa­tion” of what­ever they think will hap­pen next, said Lawrence Crea­tura, port­fo­lio man­ager at Fed­er­ated Investors.

“It’s been a good quar­ter,” he said, “but at least for the day we seem to be limp­ing across the fin­ish line.”

Investors are still con­cerned about Spain’s finan­cial health. The Bank of Spain released an audit Fri­day show­ing that seven of the country’s banks failed stress tests. Moody’s, the credit rat­ing agency, is also expected to weigh in on Spain’s cred­it­wor­thi­ness, and there are con­cerns the government’s rat­ing will be cut to “junk” status.

Stocks in Europe fell. The CAC 40 in France fell 2.5 per­cent, the FTSE 100 in Britain was down 0.6 per­cent, and Germany’s DAX fell 1 percent.

Stocks fin­ished higher in Asia on con­tin­ued spec­u­la­tion that China’s cen­tral bank will act soon to help the world’s No. 2 economy.

For the year so far, the Dow is up 10 per­cent, the S&P 500 up almost 15 per­cent, and the Nas­daq is up 20 percent.

Among U.S. stocks with note­wor­thy moves:

— Bank of Amer­ica Corp. fell 14 cents, or 1.6 per­cent, to close at $8.83 after agree­ing to pay $2.43 bil­lion to set­tle a class-action law­suit related to its acqui­si­tion of Mer­rill Lynch. The com­pany was the best per­former of the 30 stocks in the Dow dur­ing Sep­tem­ber, ris­ing 10.5 per­cent. Home Depot was the best Dow stock for the third quarter.

— Black­berry maker Research in Motion Ltd. jumped 36 cents, or 5 per­cent, to $7.50 after report­ing a smaller-than-expected quar­terly loss on Thurs­day night.

— Shoe­maker Nike fell $1.09, or 1.1 per­cent, to $94.91 after say­ing its first-quarter net income fell 12 per­cent because higher sales were off­set by increased ad spend­ing. The results were bet­ter than Wall Street had expected, but investors seemed more wor­ried about the trail ahead for Nike rather than its per­for­mance in the last quarter.

— McDonald’s Corp. fell $1.52, or 1.6 per­cent, to $91.75 after Jan­ney Cap­i­tal Mar­kets cut its rat­ing and price tar­get, say­ing dif­fi­cult year-ago com­par­isons may pres­sure sales at stores open at least 13 months, which is a key rev­enue met­ric for retailers.

The yield on U.S. 10-year Trea­sury notes fell to 1.629 percent.

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