Stocks Wrap Up Big Quarter

Updated from 4:11 p.m. EST

Stocks weren't able to stay aloft on the last day of the first quarter, but that didn't erase the fact that the broad averages still collected solid gains in the three months since the calendar turned to the new year.

The Dow Jones Industrial Average lost 41.38 points, or 0.37%, to 11,109.32, while the S&P 500 was down 5.43 points, or 0.42%, to 1294.82. The Nasdaq Composite slipped 1.03 points, or 0.04%, to 2339.79.

"Today showed the pushing and pulling we've been going through all week," said Edgar Peters, chief investment officer with Pan Agora. "Now we can look ahead to important economic numbers next week, including the nonfarm payrolls data and the ISM figures. Those are two that the [Federal Reserve] will be keeping a close eye on."

The first three months of 2006 have been kind to investors, representing one of the best single quarters in three years. The Dow has gained 3.65% since Dec. 31, while the S&P 500 has risen about 3.72%. The Nasdaq is higher by 6.09%. The Dow and the Nasdaq had their best first quarters since 2002. For the S&P, the gain was even more impressive, as the index had its strongest first quarter since 1999.

For the week, however, the Dow fell 1.51%, and the S&P 500 lost 0.61%. The Nasdaq managed to gain 1.17%.

The Dow remained in negative territory for the session as components Altria(MO Quote), Merck(MRK Quote) and Verizon(VZ Quote) fell by 1% or more.

About 1.61 billion shares traded on the New York Stock Exchange, with advancers matching decliners. Trading volume on the Nasdaq was 1.91 billion shares, and winners topped losers 9 to 7.

The 10-year Treasury bond was up 1/32 in price to yield 4.85%, while the dollar was higher against the yen and euro.

Before the opening bell, the Commerce Department said that personal income rose by 0.3% in February, while personal spending edged up 0.1%. Both results were in line with expectations. The core personal consumption expenditure index, considered the Fed's favorite inflation indicator, rose a quiet 0.1% last month.

"The PCE deflator was unchanged, so real spending rose 0.1%, slightly better than we had expected," said Ian Shepherdson, chief economist with High Frequency Economics. "Even if real spending is unchanged in March, the first quarter as a whole will be up 4.7%, making a GDP number in excess of 4% more or less a done deal."

Helping to ease the market's inflation fears were comments from Kansas City Fed President Thomas Hoenig, who said rates had moved to a point much closer to neutral. Traders took that to mean the central bank's 21-month-long string of rate hikes might be near an end.

Earlier this week, Fed policymakers raised the fed funds target rate by a quarter-point to 4.75%, the 15th increase since June 2004, when the rate was 1%.

Rising bond yields have sapped the market's momentum in the quarter's closing days. At current levels, the yield on the 10-year Treasury note is at its highest point since June 2004, as traders have fretted that strong economic data will prevent the Fed from halting its rate-tightening campaign.

The selloff in bonds hurt blue chips Thursday, with the Dow finishing down 0.6% at 11,151, and the S&P 500 losing 0.2% to 1300. The Nasdaq bucked the trend and rose 0.1% to 2341.