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Stocks Close Quarter With Rocky Session

NEW YORK ( TheStreet) -- The major U.S. stock averages pulled back Friday to end the third quarter on a down note as investors wrestled with weak reports on consumer confidence and the manufacturing sector.

Tension was also fed by the wait for Moody's review of Spain's sovereign rating, which could see country taken down to junk territory.

Still, the benchmark indices bounced off session lows after results on Spain's bank stress tests showed an as expected capital shortfall of € 59.3 billion, an amount that Chris Walker, strategist at UBS, said was "comfortably within EFSF [European Financial Stability Facility] tolerance" as there had already been an agreement for up to € 100 billion in funds specifically assigned to the recapitalization effort.

Walker also noted that a Moody's downgrade of Spain's debt rating could actually expedite the clarity desired by investors on the country's bailout plans, as "any resulting forced selling from bondholders on Monday would likely be seen as bringing forward a full-blown Spanish aid request."

The Dow Jones Industrial Average slid 49 points, or 0.36%, to close at 13,437. Earlier in the session, the blue-chip index ran as low as 13,367. The Dow lost 1.1% for the week, but was up 4.3% for the quarter.

Breadth was very negative within the Dow as losers topped winners, 25 to 5. The heaviest decliners were Bank of America (BAC - Get Report), Intel (INTC), McDonald's (MCD - Get Report), and UnitedHealth (UNH).

Shares of McDonald's slumped after the fast-food restaurant chain was cut to neutral from buy at Janney Capital. B of A was taking a hit after the company agreed to pay $2.43 billion to resolve a lawsuit accusing it of misleading investors during its purchase of Merrill Lynch.

Dow gainers included Home Depot (HD), Cisco (CSCO), and IBM (IBM).

The S&P 500 fell more than 6 points, or 0.45%, to settle at 1440.67. The index closed off 1.3% for the week, but up 5.8% for the quarter.

The Nasdaq declined more than 20 points, or 0.65%, to finish at 3116. It lost 2% for the week, but gained 6.2% for the quarter.

Apple (AAPL) was a drag as shares dropped 2% after its CEO Tim Cook apologized for the iPhone 5's maps application which many customers say is flawed.

The weakest sectors in the broad market were energy, financial and transportation. Only utilities were edging higher. Volume totaled 3.50 billion on the New York Stock Exchange and 1.86 billion on the Nasdaq.

Early weakness in equities was fueled by uninspiring datapoints on U.S. consumer confidence and manufacturing activity in the Chicago area.

The final September read on the University of Michigan Consumer Sentiment Index showed a decline to 78.3 from the previous estimate of 79.2 and was worse than the 79 level expected by economists.

The Bureau of Economic Analysis reported that consumer spending during in August increased by an as expected 0.5% after rising 0.4% the previous month, but as Jim O'Sullivan, chief U.S. economist at High Frequency Economicsnoted, "most of the rise reflected gas-led strength in prices. In real terms, spending rose just 0.1%."

Personal income ticked up 0.1% in August, which was less than expectations for a 0.2% rise, after increasing by the same, downwardly revised rate in July. The core PCE price index inched up by an as forecast 0.1% and the savings rate fell to 3.7% from 4.1%.

The Chicago ISM's business survey showed that print on the Chicago Purchasing Managers Index fell to 49.7 in September from 53 in August, coming in well below the consensus forecast of 52.9 and at its lowest level in three years. A read below 50 indicates contraction.

The FTSE 100 in London closed down 0.65% and the DAX in Germany finished down 1.01% in Friday trading. The Hong Kong's Hang Seng Index finished up 0.38% while the Nikkei Average in Japan closed down 0.89%.

November crude oil futures settled up 34 cents to $92.19 a barrel. December gold futures fell $6.60 to settle at $1,773.90 an ounce.

The benchmark 10-year Treasury rose 6/32, lowering the yield to 1.640%. The greenback jumped 0.52%, according to the dollar index.
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