Stock Market News for October 1, 2009

US stocks ended slightly lower on Wednesday even as the IMF noted that the world economy was recovering from the crisis faster than expected.  However, the agency cautioned that the improvements were in part due to stimulus measures taken by governments and central banks, and being driven by higher growth in Asia.  Revised second quarter GDP indicated the economy shrank at a 0.7% annual rate, compared to the initially reported 1% contraction and better than the expected 1.2% drop.

On Wednesday, the Dow ended down 29.92, or 0.3%, at 9,712.28 after falling nearly 134 points at one stage.  The S&P 500 index fell 3.53, or 0.3%, to 1,057.08.  The Nasdaq fell 1.62, or 0.1%, to 2,122.42.  US stocks by and large closed lower as profit taking affected major indexes on the final trading day of what had been a strong third quarter for the market.  Sentiment was essentially dampened by major economic news expected on Thursday.  On the New York Stock Exchange, 18 stocks were lower in price for every 13 that advanced. 

The Dow Jones industrials and S&P 500 index both ended the quarter with gains of more than 15%.  In fact, the market posted its strongest quarter in 11 years.  However, market observers found many investors to still have an ambivalent view of the market as they shuffled between bouts of buying and selling.  The market dipped each time bad news hit the market but subsequently recovered as each dip was generally seen as a buying opportunity.  In addition, a large amount of funds from the sidelines typically entered the market on dips.     

Sector trends remained relatively constant during the month. The strongest sectors during the quarter were basic materials (up 29.9%), financials (up 29.2%), industrials (up 23.7%), consumer services (up 21.1%) and tech (up 18.9%). During September, the list of top-performers included basic materials (up 8.6%), industrials (up 6.2%), and tech (up 5.0%).  However, financials were at the low end of sector gainers (up 2.0%), followed by oil and gas up by 5.5%.

After the close, General Motors said it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group (NYSE:PAG - Analyst Report) fell apart.  Commercial lender CIT Group (NYSE:CIT) was making a last ditch effort to reconcile with its creditors to avoid its demise.

Headwinds to growth continue as unemployment lingers, and President Obama's $787 billion stimulus efforts wind down. Fed Chairman Bernanke joins the long list of central bankers in the limelight this week, which may further point to timing plans for the eventual phase-out of accommodative policy measures.