U.S. Stocks Fall on Spain Concerns, Weak Data
09/28/2012| 06:56am US/Eastern
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--Stocks fall amid Spain concerns
--Europe broadly lower after disappointing data and on worries over a Spanish debt downgrade
--Data on personal spending in line with expectations
NEW YORK--Stocks capped their biggest monthly advance since June with a whimper, amid concerns about a review of Spain's credit rating and uninspiring readings on U.S. wage gains and manufacturing.
The Dow Jones Industrial Average shed 48.84 points, or 0.4%, to 13437.13. The blue-chip benchmark added 2.6% in September, rising for the 11th of the past 12 months. For the third quarter, it rose 4.3%.
The Standard & Poor's 500-stock index gave up 6.48 points, or 0.5%, to 1440.67 Friday. Materials and energy shares led declines while the utilities sector rose. The Nasdaq Composite Index lost 20.37 points, or 0.7%, to 3116.23.
Investors worried Moody's Investors Service might downgrade Spanish government debt to "junk" status. The ratings firm's review of Spain's credit rating was set to end Friday.
Chicago-area business activity fell more than expected in September and contracted for the first time in three years, the Institute for Supply Management-Chicago reported. U.S. consumer spending outpaced wage gains in August, in part because of higher prices, the Commerce Department said, a downbeat sign for faster economic growth.
The Dow pared morning losses of nearly 119 points after Spanish officials said recapitalizing the country's banks will require less money than previously estimated.
"After a strong quarter, it looks like we're just going to limp across the finish line," said Lawrence Creatura, portfolio manager at Federated Investors, which oversees about $356 billion.
Stocks' march forward in the latest quarter extended the Dow's gains so far this year to 10%. The rally hasn't been without its doubters. Individual investors have continued cashing out of U.S. stock mutual funds and some fund managers point to a sluggish global economy.
"Recent economic variables have been down-ticking at a moment when the stock market is up-ticking, and your central bank just shot its last bullet," Mr. Creatura said, referring to the Federal Reserve's announcement of a new bond-buying program on Sept. 13.
But the latest quarter saw the European Central Bank, German officials, and other players in Europe step up efforts to preserve the euro zone, which took a potentially severe market risk off the table, said Chris Blum, global head of equities at J.P. Morgan Private Bank, which oversees $816 billion in assets.
"The willingness to keep the euro zone together is extraordinarily strong, and that's what caught the markets by surprise," Mr. Blum said.
In other U.S. economic data Friday, the Thomson Reuters/University of Michigan consumer sentiment index for September slipped from a previous estimate but remained at a four-year high.
European markets mostly slumped, with the Europe Stoxx 600 falling 1.2%. Spain's IBEX-35 dropped 1.7%.
Asian markets were mostly higher on the back of U.S. gains in the previous session, with China's Shanghai Composite surging 1.5% and Australia's S&P/ASX 200 rising 0.1%. Japan's Nikkei Stock Average bucked the trend by declining 0.9% on disappointing industrial production data.
Front-month crude-oil futures edged up 0.4% to settle at $92.19 a barrel, while October gold futures eased 0.4% to settle at $1,771.10 an ounce. The dollar was higher versus the euro and the yen.
In corporate news, U.S.-listed shares of Research in Motion shot up 5% after the maker of BlackBerry smartphones reported late Thursday a narrower-than-expected fiscal second-quarter loss on revenue that topped forecasts, as it increased its subscriber base and improved its cash position.
Accenture climbed 7.1%, the biggest gain among S&P 500 components, after the consulting firm gave a current-year earnings forecast that topped analysts' expectations and announced a 20% dividend increase.
Nike slipped 1.1% after the athletic gear maker reported better-than-expected fiscal first-quarter earnings and revenue, but provided a somewhat downbeat outlook for world-wide future orders growth.
Adtran slumped 9.8% after the networking and communications equipment company indicated third-quarter earnings would fall short of analyst expectations, citing a challenging spending environment.
Cisco Systems rose 1.8%, the biggest gain among Dow components, after Morgan Stanley analysts raised their earnings target for the company.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com
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