SAN FRANCISCO (MarketWatch) — U.S. stock losses accelerated in the final hour of trading Friday as worries over Europe’s debt trumped mixed economic data, closing a turbulent third quarter that counted as the worst for the major indexes since the depths of the financial crisis.
The Dow Jones Industrial Average DJIA -2.16% , which had struggled over the session to maintain moderate losses, dropped 240.60, or 2.2% to close at 10,913.38. While the index was up 1.3% for week, it dropped 6% for the month, the fifth consecutive monthly loss, and fell 12% for the quarter, the worst quarter since March 2009.
John Canally, an investment strategist at LPL Financial, said much of Friday’s market activity has to do with end-of-quarter selling.
“The data are suggesting slow growth, while the market is suggesting recession; that’s the tug of war that’s going on right now,” he added.
The S&P 500 SPX -2.50% fell 28.98 points, or 2.5%, to close at 1,131.42. It’s down 7.2% for the month and 14% in the three months since the end of June.
The Nasdaq Composite Index COMP -2.63% closed down 65.36 points, or 2.6%, at 2,415.40. It shed 6.4% for the month and nearly 13% for the quarter.
The quarterly declines mark the worst quarter for the S&P 500 and Nasdaq since December 2008.
Europe in the spotlight
Headlines from Europe fed concerns over the region’s growth and debt outlook, prompting stocks to falter early.
Euro-zone inflation accelerated to a 3% annual pace in September, effectively quashing hopes of a possible European Central Bank interest-rate cut.
Also, German Economy Minister Philipp Roesler on Friday said German lawmakers were unlikely to back any further increase in the European Financial Stability Facility beyond the measures approved Thursday. Stocks had received a lift earlier in the week on hopes the EFSF would be expanded to protect larger debt-ridden countries in the euro zone.
U.S. markets ended up following their European counterparts with the Stoxx Europe 600 index XX:SXXP -1.19% falling 1.2% for the day, and 17.1% for the quarter. Read more on European stocks.
Against this backdrop, the euro EURUSD -0.0006% fell against the U.S. dollar. Read more on currencies.
Leading blue chip stocks into the red Friday was Hewlett-Packard Co. HPQ -5.59% , with a 5.6% drop on the day, and Alcoa Inc. AA -4.87% , with a loss of 4.9%.
Other notable decliners included Bank of America Corp. BAC -3.62% , American Express Co. AXP -3.90% and J.P. Morgan Chase & Co. JPM -4.05% . Merck & Co. MRK +0.12% was the only gainer on the Dow with a 0.1% rise.
Domestically, economic data was mixed. September’s reading of consumer sentiment rose to 59.4, recovering from a nearly three-year low of 55.7 in August, according to a Thomson Reuters/University of Michigan gauge. Read more about the latest data.
Manufacturing activity in the Chicago region, meanwhile, expanded at a more rapid pace, rising to 60.4 in September from 56.5 in August. Read more about the Chicago PMI.
Not all economic data was that promising, however.
Ahead of the opening bell, the Commerce Department said personal income in August fell a seasonally adjusted 0.1%, the first decline since October 2009. Consumer spending increased a seasonally adjusted 0.2%. Read more on spending.
“With income down and spending holding up, consumers dipped into savings, and that’s not a healthy sign,” said Gary Bigg, an economist at Bank of America.
Earlier, a Chinese survey of manufacturing indicated industrial output weakened for the third straight month in September. HSBC’s China Manufacturing Purchasing Managers’ Index held flat at 49.9, sitting just below the 50 level dividing expansion from contraction.
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