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Stocks Falter but Log Best Quarter in 11 Years

Stocks logged their best quarter in 11 years, helped by the weak dollar, despite today's soft landing.

Stocks ended modestly lower today as weak readings on manufacturing and jobs offset a a report that showed the economy wasn't in as bad a shape as first expected over the summer.

The Dow Jones Industrial Average shed about 30 points, or 0.3 percent, while the S&P 500 fell 0.5 percent and the Nasdaq dropped 0.1 percent.

Still, the Dow gained 15 percent for the quarter, its best quarterly performance since the fourth quarter of 1998. The S&P and Nasdaq each gained about 15 percent as well.

It was also the first back-to-back quarterly gains for the Dow, S&P 500, Nasdaq and Russell 2000 in two years.

The top three performers on the Dow this quarter were Caterpillar, American Express and General Electric.

The best-performing sectors were financials, which gained 25 percent, followed by industrials and materials, which each gained about 21 percent.

Those sectors were some of the worst performers in today's session.

What rattled investors' cages today was a report that showed the Chicago purchasing-manager's index fell to 46.1 in September from 50 in August. A reading of 50 or higher indicates expansion; below that, contraction.

The Chicago report isn't usually a market-mover, as it's more volatile than the national ISM reading, due out tomorrow. But it stirred some doubt about the economic recovery.

Economists expect to see the ISM gauge to tick up to 54 from 52.9 in August.

Adding to the worry was a disappointing jobs report: ADP said private employers cut 254,000 jobs from their payrolls in September, more than expected but less than the revised 277,000 loss recorded in August.

The ADP report is closely watched as it comes out before the government's September jobs report, which is due out on Friday. Economists surveyed by Reuters expect to see that 180,000 jobs were lost this month, compared with 216,000 in August.

Meanwhile, the economy contracted at a 0.7-percent rate in the second quarter, the government said in its final reading on the quarter. That was less than the 1-percent decline reported in the prior reading.

Oil rebounded after a volatile session today, climbing more than $3 to settle out the quarter at $70.61 a barrel.

Bank of America shares skidded 1.4 percent after the bank said it's selling its asset-management unitto Ameriprise for about $1 billion. Ameriprise shares jumped 12 percent.

Goldman Sachs ticked higher after two brokerage firms — Bernstein and KBW — raised their outlooks for the Wall Street titan.

Shares of CIT Group tumbled 45 percent as the commercial lender is nearing a plan to hand itself over to bondholders. If they can't get get bondholders on board, the company may be forced to file for bankruptcy protection.

Discovery Laboratories shares surged 22 percent after the small-cap pharma said government regulators had agreed to the firm's plan to settle questions over its experimental lung drug.

Nike shares rose 7.6 percent after the sneaker maker beat earnings estimates.

Hewlett-Packard shares slipped after the Wall Street Journal reported the company may combine its printer and PC divisions.

Overall, techs fared better today than other sectors, with Cisco and IBM gaining.

Wynn Resorts fell 3.2 percent despite the fact that the company saw its Asian IPO price at the top of the estimated range.

In the pharma sector, Johnson & Johnson and Boston Scientifichave settled a patent infringement lawsuit over heart stents, with Boston Scientific paying J&J $716.3 million.

Volume was heavy, with about 1.77 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 3 to 2.

Still to Come:

THURSDAY: Personal income/spending; jobless claims; ISM manufacturing index; pending-home sales; construction spending; auto sales; Fed's Bernanke, Pianalto, Lockhart speak
FRIDAY: Sept jobs report; factory orders; Calif. IOUs mature

Send comments to cindy.perman@nbcuni.com.