Wall Street drops on growth fears, quarter remains positive

NEW YORK (Reuters) - U.S. stocks fell on Friday as investors locked in gains at the end of a strong quarter and amid uncertainty ahead of the result of stress tests on Spanish banks.

Equities added to their losses following a weaker-than-expected read on the Institute for Supply Management-Chicago's index of Midwest business activity, which fell to 49.7 in September from 53.0 in August.

The final read on the Thomson Reuters/University of Michigan survey on consumer sentiment was also less than expected, though it advanced to its highest in four months.

"We had been seeing good data recently, but now we seem to be following the slowdown in China and Europe and we're seeing weakness," said Paul Nolte, managing director at Dearborn Partners in Chicago.

A plan for economic reform in Spain had sparked a rally Thursday, though the bank stress-test results and a review of Spain's credit rating by Moody's, both due later in the day, could compound the nation's challenges in dealing with its debt.

Investors are also worried about anti-austerity protests across Europe, which could make political maneuvering more difficult.

Trading was light following Thursday's gains and on the last day of the quarter, when money managers reposition their portfolios. The S&P has advanced 5.5 percent over the past three months.

All ten S&P sectors fell, though losses were limited in technology as U.S. shares of Research in Motion rocketed 13 percent to $8.04 on the back of a smaller-than-expected quarterly loss.

Nike Inc warned of slowing orders in China, the latest company to caution on how economic weakness in the Asian giant was impacting its business. Shares fell 2.4 percent to $93.63 and pressured consumer discretionary stocks down 0.9 percent as weakest on the day.

The Dow Jones industrial average was down 111.61 points, or 0.83 percent, at 13,374.36. The Standard & Poor's 500 Index was down 10.17 points, or 0.70 percent, at 1,436.98. The Nasdaq Composite Index was down 20.60 points, or 0.66 percent, at 3,116.00.

The S&P is down 1.6 percent this week so far, for a second straight week in the red, though Thursday's rally narrowed the losses from five straight days of declines. The Dow is down 1.5 percent for the week and the Nasdaq is down 2 percent.

Wall Street's gains in the quarter were largely linked to expectations for measures by central banks around the world to boost their economies.

After those expectations were met, stocks have struggled for direction and trading has been thin, as investors looked to new catalysts amid lackluster data and lowered corporate earnings outlooks. Advance Micro Devices , which cut its outlook in July, has slumped 41 percent to be the S&P's worst performer this quarter.

U.S. consumer spending rose in August by the most in six months as households stretched to pay for higher gasoline prices, according to a Commerce Department report.

There may be volatility on Friday as investors "window dress," or undergo a last-minute push to reposition portfolios ahead of the quarter's end. MetroPCS and Sprint Nextel are the S&P's two biggest gainers in the quarter, with the former almost doubling in value.

(Editing by Bernadette Baum)

Source: http://news.yahoo.com/wall-street-opens-lower-last-day-quarter-134617078--finance.html

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