Stock Market News for October 1, 2010

Stocks wrapped up their best September in more than 70 years as investors, encouraged by some modestly positive economic data, set aside broader concerns about the economy and bought shares. Although worries about euro zone’s finances kept a lid on investors’ enthusiasm, easing fears about a double-dip recession and an accommodative Federal Reserve helped bring some stability back to the markets. 

Traditionally considered weak for stocks, September saw the major averages notching up gains of at least 7.7%. During the month, the blue-chip Dow average advanced 7.7%, its best monthly performance since September 1939. The broader S&P 500-stock index gained 8.7% during the month while the strength in technology shares helped the Nasdaq surge 12% during the month.  Also, it was stocks’ best quarterly performance in a year.

Of the Dow average’s 30 components, Caterpillar (NYSE:CAT - Analyst Report), up 31% and DuPont (NYSE:DD - Analyst Report), up 29%, led the quarterly advances. 

European finances came back to haunt investors as Moody’s Investors Service lowered Spain’s credit rating by one notch. Meanwhile, some reports suggested Ireland’s efforts to rescue the country’s troubled banking sector would be somewhere near $46 billion.

The mood on Friday, however, appeared somewhat cautious as investors positioned their holdings ahead of a new quarter. After rising as much as 113 points during the day, the Dow closed with a loss of more than 47 points, or 0.4%, at 10788.05. Weakness in technology shares sent the technology-laden Nasdaq composite index off 8 points, or 0.3%, to 2368.62. The S&P fell 4 points, or 0.3%, to 1141.20. On the New York Stock Exchange, advancing shares narrowly edged out declining issues.

On Friday, Treasurys saw a drop in demand, sending yields higher. The yield on the 10-year Treasury note, which is used to determine interest rates, inched up slightly to 2.51% from 2.50% late Wednesday. 

This morning's futures suggest a positive start to October following a second month of positive news from Beijing's official manufacturing index, and reports of one of China's biggest-ever investments in SA brightening prospects for demand for resource assets and adding to recent mega-deal action.

Shedding its safe-haven status, the US dollar dropped to a fresh 8-month low this morning. Meanwhile, gold continued to scale new heights on its safe haven appeal, jumping to a record high of $1300. Crude prices, considered a proxy for global growth, settled at $79.97 at yesterday's close, its highest close since early August.

Read the full analyst report on CAT

Read the full analyst report on DD