Wall St dips, but logs best quarter in a year

NEW YORK -- Wall Street wrapped up its best quarter in a year Thursday with the S&P and Nasdaq logging in the biggest monthly gains since April 2009, as data showed the economy isn’t in such bad shape.

Defying September’s track record as the worst month for stocks, the S&P 500 was up 8.8%. In the third quarter, the index gained 10.7%, which was the best in a year.

The session was volatile, split between investors positioning for the end of the quarter and those buying on encouraging data. After up and down moves of nearly 1%, equities ended slightly lower.

Still, the S&P 500 seemed to be struggling to break above the 1,145-1,150 trading range.

“Since September was such a strong month, many think October will be the scary one. If (future) data and earnings confirm that we are finally out of fears of a double-dip (recession), October may be the month for the S&P to break above trading range and reach the highs that we saw in April,” said John Canally, an economist and investment strategist at LPL Financial in Boston.

A poll by Reuters showed leading investors around the world increased equity holdings to their highest level in three months in September and reduced bonds and cash holdings as confidence about the global economy grew.

The Dow Jones industrial average slipped 47.23 points, or 0.44%, to 10,788.05. The Standard & Poor’s 500 Index declined 3.53 points, or 0.31%, to 1,141.20. The Nasdaq Composite Index fell 7.94 points, or 0.33%, to 2,368.62.

Semiconductor companies, a growth sector that advanced during the quarter, ranked among the day’s losers and weighed on the Nasdaq. The Philadelphia semiconductor index fell 0.7%.

In the options market, bearish activity was detected in Micron Technology Inc about a week before its quarterly results, and in Dell Inc, as some investors appear to be taking defensive positions.

“Option plays in both Dell and in Micron Tech today appear to be investors protecting their recent gains in these respective stocks,” said Joe Kinahan, TD Ameritrade’s chief derivatives strategist.

“The common thread in both of these tech stocks is that investors are nervous after a spectacular September for stocks and are looking for ways to hedge their positions and still enjoy further upside if we continue to rally.”

The Dow’s biggest advancer was Boeing Co., up 0.9% at $66.54 after the aircraft manufacturer said its full-year results would not be hurt by its delaying the first delivery of its 747-8 Freighter, its biggest commercial jet.

American International Group Inc. rose 4.4% to $39.10 after the insurer and the U.S. government unveiled a plan for the company to repay its $182.3 billion taxpayer bailout.

Prudential Financial Inc. shares fell 4.2% to $54.18 after it agreed to buy two Japanese life insurance units from AIG for $4.2 billion.

The market had opened higher after data showed initial jobless claims fell sharply in the latest week, pointing to modest strengthening in the labor market, while the Commerce Department revised higher its final read on second-quarter economic growth, as measured by gross domestic product. That backed up stronger readings for regional business activity indexes in New York City and the U.S. Midwest, seen as early indicators before national surveys Friday and later next week.

Volume was light at 8.76 billion shares traded on the New York Stock Exchange, the Amex and Nasdaq, compared with the previous year’s daily average of 9.65 billion shares. But it was the highest daily volume since July 22 and relatively stronger than it’s been in the past couple of weeks.

Advancing stocks only slightly outnumbered declining ones on the NYSE by 1,511 to 1,455.

On the Nasdaq, the balance was tilted slightly to the downside, with 1,322 stocks declining and 1,292 stocks advancing.