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Stocks End Great Quarter With a Thud

Wednesday, 31 Mar 2010 | 5:57 PM ET

Stocks ended a strong quarter with a thud Wednesday after a disappointing report on jobs from ADP.

The Dowlost about 50 points, led by DuPont . Cisco and Microsoft . The NasdaqandS&P 500 also ended lower.

But all three indexes ended higher for the month and the quarter. The Dow gained 4.1 percent this quarter, and is now up for four straight quarters.

For the quarter, the big winners on the Dow were Boeing, up 34 percent, GE, up over 20 percent, and Bank of America, up more than 18 percent.

Over on the S&P, the winner was Zions Bancorp, followed by Genworth Financial and Smith International.

And on the Nasdaq 100, the best performers of the quarter were Baidu, Liberty Media and Wynn Resorts.

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In terms of sectors, industrials were at the top of the first-quarter pack, up more than 12 percent, followed by financials and consumer discretionary, both up more than 10 percent.

Today's session didn't reflect the quarter's bullishness as investors were rattled by a disappointing ADP report.

ADP said employers slashed 23,000 jobsfrom payrolls in March, which came as a surprise to economists, who had expected to 50,000 jobs were added last month.

The ADP report is closely watched ahead of the government's jobs report on Friday.

"This was a shocker that should raise some questions about Friday’s employment report," Joel Naroff of Naroff Economic Advisors, said of the ADP report. He still expects to see an average of 50,000 to 75,000 jobs added per month this year, but cautioned that it may not accelerate.

"We could see a short term pop in private sector job growth in the spring and summer similar to the swing we have seen in inventories," Naroff said. "Firms that have needed workers but refused to hire will start doing that. But once they add those workers, they may not be in any mood to hire any more."

Stocks added to their losses after the Chicago Purchasing Manager's Index dropped to 58.5 in a March from 62.6 in February, and pared their losses somewhat after a subsequent report showed nationwide factory orders rose 0.6 percentin February, double the expected increase.

Bank stocks such asBank of Americaand JPMorgan squeaked out gainsafter a rocky session as loan losses showed signs of stabiliziationand expectations that an eventual rise in interest rates would help profits.

"It is going to be inevitable that we’re going to see higher rates this year," said Todd Schoenberger, managing director at LandColt Trading. "One thing about financials is that they make money when rates are higher. So there is the feeling that if rates do start increasing, then they’ll have a positive impact on their bottomline."

In Europe, Moody's downgraded its credit rating on five Greek banks, including National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank and Emporiki Bank.

This comes amid news that Greece will issue a U.S. dollar-denominated bondin late April or early May.

On the commodities front, oil settled at a 1 1/2-year high above $83 a barrel after official U.S. inventory data showed a slight but unexpected build in crude stocks. The dollar retreated from a three-month highagainst the yen and fell against the euro while gold rose more than $10, settling around $1,114 an ounce.

Oil drillers such as Diamond Offshore Drilling , Transocean and Noble saw a boost after President Obama announced plans for an expansion of offshore oil and gas drillingin an effort to win Republican support for new laws to fight climate change.

Chevron shares rose after the oil giant won a three-year old arbitration fight in Ecuador.

Honeywell shares rose after the company, which makes everything from air purifiers to plane-navigation systems, raised its first-quarter profit outlook. Bloggingstocks said expect Honeywell, which also makes thermostats, to take off as it capitalizes on homeowners' desire to maximize the energy efficiency of their homes.

Rite Aid shares tumbled after the drugstore reported a worse-than-expected loss after a mild cold and flu season and projected its full-year loss would widen as well.

Dollar stores continued to do well: Dollar General beat earnings expectations and projected a 4-to-6-percent increase in same-store sales this year.

After the bell today, the latest quarter numbers from Blackberry maker Research In Motion and Micron Technology will be released.

In auto news, Ford shares were lower despite news that the no. 2 auto maker would be able to speed up its debt repayment, according to CEO Alan Mullaly. Earlier, the firm said it is planning an electric car of its own, using Microsoft technology.

AutoNation shares tumbled after the auto dealership group announced expectations for a first-quarter earnings increase in line with Wall Street forecasts. The company also said it plans to amend and extend a credit facility and issue unsecured notes to fund an offer to buy back some debt.

Auto makers are slated to release March sales numbers on Thursday.

AMR's and JetBlue Airways jumped after the airline firms agreed to begin a partnership allowing JetBlue passengers with one way tickets to connect to American Airline's international flights from New York and Boston.

Blockbuster shares rose despite the news that billionaire investor Carl Icahn slashed his stake in the company, selling more than 13 million shares.

In IPO news, Meru Networks and SS&C shares rose sharply in their market debut, while Scorpio Tankers fell.

And, the IPO of Primerica, the door-to-door insurance unit of Citigroup, is expected to price tonight. The company set the expected range between $12 and $14. The move is expected to boost Citigroup .

Still to Come:

THURSDAY: March auto sales; Challenger job-cuts report; weekly jobless claims; construction spending; ISM manufacturing index
FRIDAY: March jobs report; Stock market closed in observance of Good Friday; Bond market closes at noon

Send comments to cindy.perman@nbcuni.com.

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