Updated from 4:12 p.m. EDT
Stocks in the U.S. closed the third quarter with minor losses Friday, as market participants digested a host of economic data and a string of comments about the possibility of a recession.
Dow Jones Industrial Average
lost 17.31 points, or 0.12%, at 13,895.63. The
was off 4.63 points, or 0.3%, at 1526.75, and the
was 8.09 points, or 0.3%, lower at 2701.50.
Breadth was negative and volume was weaker. On the
New York Stock Exchange
, 2.98 billion shares changed hands, as decliners topped advancers by a 9-to-7 margin. Volume on the Nasdaq reached 1.91 billion shares, with losers outpacing winners almost 3 to 2.
For investors, the day started with new observations from the former
chief, Alan Greenspan, on the problems facing the economy. During an interview on a
radio program, he said that the chance the U.S. sinks into a recession is less than 50%, although he is more uncertain of how strong world economies are.
With his latest musing, the ex-central banker said he sees a serious downturn as more likely than he did before. Previously, had guessed that the odds of a recession were one in three.
The head of
echoed Greenspan's concerns, according to an article in
. CEO Richard Syron put the probability of a recession in a range between 40% and 45%.
"There is always a chance of a recession, and we won't know the effects of the Fed rate hikes for a year or more," said Linda Duessel, senior portfolio manager and market strategist with Federated Investors. "However, there is no evidence we've gone into a recession. The second-quarter GDP report earlier this week showed a rise of 3.8%, and that means we are nowhere near a recession."
The outlook for economic growth also took a blow at
, which reduced its projection for 2008 U.S. gross domestic product to 1.8%.
Dennis Lockhart, president of the Atlanta Fed, said during a speech that he foresees a "soft landing" for the economy, but that more turbulence could await. William Poole, who runs the St. Louis Fed, argued that the bank did the right thing in cutting rates by 50 basis points earlier this month, but he said investors shouldn't simply assume more easing is assured.
Meanwhile, there was a torrent of data to contend with. The Commerce Department said personal income rose 0.3% last month, slightly below expectations. Consumer spending was up 0.6% in August, greater than the 0.4% forecast. On the positive side, the year-over-year reading on the core deflator fell 0.1 percentage point to 1.8%.
"The Federal Reserve closely watches the price index for personal consumption expenditures, less food and energy," said Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, in an emailed statement.
"Oil and other commodity prices continue to surge on international markets, and this is likely to feed U.S. inflation," he added. "The Federal Reserve, by constraining U.S. economic activity, can do little to slow rising commodity prices, and will likely continue to focus on stabilizing credit markets and avoiding recession."
Also on the docket, the Chicago purchasing managers' index, a measure of Midwestern factory activity, rose to 54.2 this month from 53.8 in August. Analysts had anticipated a slight decline.
"The trend in the survey has certainly softened since the middle of the year," said Ian Shepherdson, chief economist with High Frequency Economics. "But it is certainly not in free fall, and it suggests little change in the national Institute for Supply Management next week."
Construction spending was better than expected, rising 0.2% month over month and exceeding forecasts of a 0.3% drop. Finally, the University of Michigan's consumer sentiment reading slipped to 83.4 from 83.8 previously, and was a bit short of what was predicted.
Despite the sluggishness, the major averages still had a winning three months. The quarter was a wild one, as crude oil touched a record, gold hit its highest point since 1980, the dollar slumped and the subprime mortgage crisis rattled markets around the globe.
The Dow rose 487 points, or 3.67%, for the quarter. The S&P 500 added 1.5%, and the Nasdaq climbed 3.8%.
swung to a fiscal fourth-quarter profit, topping Wall Street's estimates by a penny. However, first-quarter revenue guidance was a bit below forecasts, and the shares were off $1.66, or 6.8%, to close at $22.84.
soared 34.2% after private-equity group Bain Capital said it would acquire the company for $2.2 billion, a value of $5.30 per share. 3Com ended up $1.26 to $4.94.
Turning to analyst changes, UBS reiterated a buy rating on
as a buy. IBM was 15 cents, or 0.1%, higher at $117.86. Fellow Dow component 3M tacked on 21 cents, or 0.2%, to $93.60.
Commodities were mixed. A day after shooting more than 3% higher, crude oil lost $1.22 to $81.66. Gold and silver futures finished with sharp gains.
U.S. Treasury securities rallied early, but momentum faded late. The 10-year note was down 7/32 in price to yield 4.59%, and the 30-year bond fell 10/32 to yield 4.85%.
As for the currency market, the euro hit yet another record high against the dollar, climbing past $1.42.
Overseas markets were generally weak. In Asia, Japan's Nikkei 225 eased 0.3% overnight, while Hong Kong's Hang Seng was up 0.3%. London's FTSE 100 lost 0.3% after word that embattled mortgage lender
sought additional liquidity from the Bank of England. Other European bourses were also lower.