US stocks fell this week, capping the worst quarterly loss for the S&P 500 Index since the end of 2008, as the sovereign debt crisis in Europe and fears of a global slowdown overshadowed improving economic reports in the US.
The S&P 500 lost 0.4 percent to 1,131.42, dropping for a second straight week after a 2.5 percent drop on the final day erased earlier advances. The Dow Jones Industrial Average rose 141.9 points, or 1.3 percent, to 10,913.38, after declining 6.4 percent the previous week.
“It’s been a horrific quarter and investors are feeling bruised and battered across the board,” Alex Tedder, senior portfolio manager for American Century Investments in New York, said in a telephone interview. “We’re coming from a background that is extremely depressed and extremely uncertain with the big question mark over growth that we have globally.”
The week’s decline brought the S&P 500 to a quarterly loss of 14 percent, the worst drop since the three months ending December 2008, when the index lost 23 percent amid its worst plunge since the Great Depression. The S&P 500 has declined in nine out of 13 weeks in the quarter. For the year, the S&P 500 is down 10 percent. The Dow dropped 12 percent for the quarter and has lost 5.7 percent for the year so far.
Investors dumped equities in the third quarter, as concern increased that Europe’s debt crisis would trigger a global recession and the US Federal Reserve said there were “significant downside risks” to the US economy. The S&P 500 slumped as much as 18 percent from its high in April, as European finance chiefs clashed over how to assist Greece and US lawmakers struggled to agree on raising the US federal government’s debt limit.
Stocks advanced early in the week amid optimism that Europe would contain its debt crisis, as Germany’s lower house of parliament approved expanding the European bailout fund. Optimism faded amid growing concern policymakers were divided on how to solve the crisis, and as investors increasingly shifted their focus to the global economy.
US economic reports signaling improvements weren’t enough to keep stocks elevated. US Department of Labor figures showed applications for jobless claims fell to a lower number than was estimated by economists for the week ended Sept. 24. Orders for US capital goods climbed in August by the most in three months, according to a US Department of Commerce report.
“We have gotten some incrementally good news here domestically, but that’s just still overshadowed by the issues in Europe,” said Walter Todd of Greenwood Capital in Greenwood, South Carolina, in a telephone interview. “There’s still a lot of unknowns.”