Worst quarter in four years for U.S. stocks
NEW YORK -- U.S. stocks rose more than 1 percent on Friday, but the one-day bump couldn't overcome a long summer rout that made the three months ended Sept. 30 the worst quarter for equities in four years and wiped out an estimated $11 trillion in wealth around the globe.
The last session of the third quarter had equities rebounding following months of concerns about slowing global growth. From fretting over Greece's debt, China's slowing economy, falling emerging-market currencies and uncertainty over the timing of interest-rate moves by the Federal Reserve, investors in the U.S. stock market have been battered in the past three months.
The biggest S&P 500 losers in the quarter: energy companies, down nearly 20 percent, and raw-material suppliers, hit nearly as hard.
"The U.S. economy still looks pretty good, particularly labor and housing, but the global picture is mixed, which continues to be a worry for investors in terms of U.S. immunity," Mark Luschini, chief investment strategist at Janney Montgomery Scott, told CBS MoneyWatch.
Data Wednesday offered a a mixed take on the U.S. economy, with private-sector employment rising by 200,000 in September, according to payroll-processing firm ADP, but factory activity in the Midwest contracting, clouding the outlook on whether the Federal Reserve will hike interest rates in 2015.
"We have a divided economy - the industrial sector is weak due to the strong dollar and weak global demand, and the labor market and service sector are strong because the consumer is active here - that's because energy prices have given them and businesses an effective tax break," said Bruce Bittles, chief investment strategist at RW Baird & Co. "How can the Fed raise rates when the industrial sector is so weak?"
The Dow Jones Industrial Average (DJI) rose 236 points, or 1.5 percent, to 16,285. The Standard & Poor's 500 (SPX) jumped 36 points, or 1.9 percent, to 1,920. The Nasdaq Composite (COMP) climbed 103 points, or 2.3 percent, to 4,620.
Much of Wednesday's surge is based on the action the prior two days, with the S&P 500 testing and holding above its August low of 1,865, said Bittles. "That gave encouragement that a bottom is being formed here - plus we're oversold."
Luschini concurred: "We were ripe for an oversold bounce, and the fact that we seem to be peeling off the highs suggest that is exactly what it is, with some investors liquidating positions they wished they'd had a 100 points ago."
Ralph Lauren (RL) jumped 12 percent after the company named a new CEO to replace its founder. The stock is still down sharply for the year. Conversely, shares of retailer Gap (GPS) dropped 6 percent as investors offered a negative take on Stafan Larsson's exit from the retailer to take the helm of Ralph Lauren. Chesapeake Energy (CHK) rose 5 percent after saying it would cut 15 percent of its workforce.
Stock markets in Asian and Europe also bounced higher Wednesday, led by gains in Japan where investors were buoyed by expectations for more economic stimulus.
Still, most overseas stock benchmarks have lost ground for the quarter, weighed down by the prospect of higher U.S. interest rates and weak growth in many major economies. The worst performing of those indexes, the DAX, is down 12.5 percent for the July-September quarter, which ends Wednesday.
Investors will get another piece of economic data on Friday, when the Labor Department releases its readout on jobs for September.
Employers added a weaker-than-expected 173,000 jobs in August.
"The recent turmoil in financial markets does not appear to have impacted hiring, at least not yet," said Stuart Hoffman, chief economist with PNC Financial Services Group (PNC), in a note. "Job growth was solid across industries and firm sizes."
Investors will also look to Thursday's release of September manufacturing data as a gauge of U.S. economic strength.