US Stocks Fall, Closing Out DJIA's Biggest Quarterly Point Drop Since Late '08

U.S. stocks fell Friday, closing out the market's biggest quarterly drop since the financial crisis with a triple-digit dive in the Dow Jones Industrial Average.

The blue-chip Dow shed 240.60 points, or 2.16%, to 10913.38, after a batch of glum overseas economic data weighed on investor sentiment. Stocks sank into the close, finishing at session lows. The loss capped a 12% third-quarter decline for the Dow, the biggest percentage drop since the first quarter of 2009 and the biggest point swoon since late 2008. The session also capped the measure's fifth straight monthly drop, the longest such streak since the six months ending in February 2009.

The Standard & Poor's 500-stock index shed 28.98 points, or 2.50%, to 1131.42, putting the broad measure's quarterly loss at 14%. The Nasdaq Composite tumbled 65.36 points, or 2.63%, to 2415.40, for a 13% quarterly fall. The two indexes each also posted their worst quarterly drop since late 2008.

The materials sector led all S&P 500 sectors lower as it fell 3.7%. Financial stocks were not far behind. Two of the Dow's three worst-performing stocks in the third quarter led the way lower Friday. Hewlett-Packard fell $1.33, or 5.6%, to 22.45, and Alcoa shed 49 cents, or 4.9%, to 9.57.

Utilities and consumer staples, two sectors viewed as defensive, posted the smallest drops.

A jump in the euro zone's annual inflation rate for September soured the tone of trading before U.S. markets opened, convincing many investors that the higher rate makes the European Central Bank less likely to lower interest rates. Concerns over weak Chinese manufacturing data also crimped stocks as traders closed out a difficult quarter.

"The inflation [reading] put a big wet blanket on the market today," said Doug Cote, chief market strategist at ING Investment Management. "It makes an ECB rate cut harder. The market was starting to look to that as the next form of stimulus."

Stocks briefly pared their losses after Berkshire Hathaway's Warren Buffett said on CNBC that the company already has begun a stock-buyback program, also complimenting President Barack Obama's efforts to jump-start the economy. But the comments failed to change the negative tone of Friday's trading.

Micron Technology dropped 83 cents, or 14%, to 5.04, after the chip maker reported a fiscal fourth-quarter loss, rather than the slight profit that analysts had expected.

Eastman Kodak slumped 91 cents, or 54%, to 78 cents. The Wall Street Journal reported that the company has hired restructuring lawyers amid growing investor concerns about its turnaround prospects.

Ingersoll-Rand sank 3.87, or 12%, to 28.09, after the industrial conglomerate lowered its earnings and revenue outlook for the quarter, citing weak demand in consumer-related and commercial-security businesses.

Orion Marine Group shed 46 cents, or 7.4%, to 5.77. The marine construction and services company said its markets have experienced "uncertain and tough times," citing weak economic growth and delays in federal spending.

McGraw-Hill is in advanced talks to combine its S&P Indices business with CME Group's Dow Jones Indexes, according to a report in The Wall Street Journal. McGraw-Hill lost 1.31, or 3.1%, to 41, and CME Group shed 10.78, or 4.2%, to 246.40. A deal could make it harder for CBOE Holdings to renew key S&P licenses. CBOE's stock fell 1.25, or 4.9%, to 24.47.

Fertilizer stocks took a hit in the wake of a government report showing larger-than-expected corn stockpiles. Mosaic lost 5.23, or 9.7%, to 48.97 and CF Industries shed 17.55, or 12%, to 123.39.

Chicken and pork producers gained after the same report on corn. Sanderson Farms rose 1.36, or 3%, to 47.50. Smithfield Foods gains 37 cents, or 1.9%, to 19.50. Tyson Foods added 25 cents, or 1.5%, to 17.36.

U.S. economic data were mixed. Americans' income fell for the first time in nearly two years in August, the Commerce Department reported Friday. But the Thomson Reuters/University of Michigan consumer-sentiment index showed a brighter view on the economy at the end of September, while a survey of Chicago-area purchasing managers was better than economists expected.

-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com

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