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[BRIEFING.COM] A weak performance on Friday resulted in another weekly loss for stocks -- their eighth in 10 weeks of trade. Such an extensive stretch of weakness has left the stock market to log a monthly loss of 7% and a quarterly loss of more than 14%.
Trade on Friday was spent entirely in negative territory. Participants turned to selling after watching markets overseas slide. Trade in Europe, which has influenced sentiment at home for weeks, saw Britian's FTSE fall 1.3%, France's CAC close 1.5% lower, and Germany's DAX drop 2.4% after a 3.0% jump in Eurozone CPI dampened hope for a rate cut by the European Central Bank. Overnight action in Asia saw Hong Kong's Hang Seng slide 2.7%, China's Shanghai Composite slip 0.3%, and Japan's Nikkei finish flat. China's HSBC Manufacturing PMI for September stayed below 50, the dividing line between contraction and expansion, for the third straight month, making some question the country's ability to sustain growth in the face of sluggish global conditions.
The inclination to sell trumped a couple of better-than-expected domestic reports. The Chicago PMI for August bested the Briefing.com consensus call of 54.0 by improving to 60.4 from 56.5 in July. The final September reading on consumer sentiment from the University of Michigan was revised upward to 59.4 from the preliminary reading of 57.8. A reading of 57.5 had been expected.
Personal income and spending numbers for August were less impressive. Income declined by 0.1% while spending increased by 0.2%. Income failed to meet the 0.1% increase expected, on average, by economists polled by Briefing.com, but the increase in spending was exactly in line with what had been expected.
Without any kind of positive leadership, stocks were left to wrestle with sellers throughout the session. Even defensive-oriented stocks succumbed to aggressive selling pressure after they had limited losses in the first half of the day. As a result, all 10 major sectors tumbled to losses in excess of 1%.
Financials and materials stocks fell the hardest. They dropped 3.5% and 3.7%, respectively. They were also some of the poorest performers for all of September and all of the third quarter. During September, financials fell 11.5% while materials tumbled 16.6%. Over the course of the quarter, though, financials shed 23% and materials surrendered a full quarter, 25%, of their market cap.
With selling intensifying into the close, stocks effectively surrendered the gains that they had staged in previous sessions. That caused stocks to record a weekly loss of 0.4%. It all made for an appropriate conclusion to the third quarter, which goes down as the stock market's poorest quarter since a near 23% drop in the fourth quarter of 2008.
Although the action on Friday appeared appropriate in the context of the quarter, it contrasted with trade at the start of the week, when stocks climbed more than 2% on Monday and another 1% on Tuesday. Buying in both days was based largely on hope that officials in Europe are finally crafting a comprehensive plan that will help the region shore up its finances.
Momentum from those two sessions helped stocks open higher on Wednesday, but participants, starved for details of the rumored plan, began to push back against stocks and ultimately dropped the market for a 2% loss. Data that day didn't do anything to bolster the case buying either -- durable goods orders and orders less transportation both slipped 0.1% during August.
But by Thursday, approval from highly influential Germany to expand the European Financial Stability Facility helped stocks snap back. Upbeat data also played a pivotal part. The latest weekly initial jobless claims count dropped by 37,000 from the prior week to 391,000, which is the first time in more than a month that initial claims fell below 400,000. Moreover, the final reading for second quarter GDP showed growth of 1.3%, which not only marked an increase from the 1.0% rate posted in the prior reading, but it also bested the 1.2% growth rate that had been broadly expected.