Stocks ending gloomy 3rd quarter on a weak note - Business - Stocks & economy

& Stocks fell Friday, putting the market on track to end its worst quarter since the peak of the financial crisis.&

The Dow Jones industrial average is down 74 points, or 0.7 percent, at 11,080 at 12:45 p.m. Eastern time. The Dow, S&P 500 and Nasdaq have all lost more than 10 percent this quarter, the first time that's happened since the financial crisis crested at the end of 2008.

Markets have been wracked this summer by growing fears about a possible default by Greece and the increasing likelihood of a global recession. Uneven economic data have touched off sudden bouts of buying and selling.

Seven of the S&P's 10 industry groups lost ground Friday. Financial companies fell the most, 2 percent. The three groups that rose are industries that tend to be more resilient to weak economic conditions: utilities, consumer staples and health care.

The Standard & Poor's 500 index lost 11, or 1 percent, to 1,149. The Nasdaq composite index dropped 25, or 1 percent, to 2,456.

The S&P 500 index is down 13 percent since July 1, the start of the third quarter. That's the biggest quarterly drop since the three months ended Dec. 31, 2008, when global financial markets seized up. Excluding that period, the S&P has not dropped this much in a quarter for nine years.

"The market has really seen some damage this quarter," said Mike Hurley, portfolio manager of Highland Trend Following Fund.

The weakness appears to be the start of a longer decline, Hurley said, because bonds are gaining value and interest rates are low. Traders also are selling commodities such as oil for which demand would fall during an economic downturn. "Lower interest rates and commodity prices are definitely an indication that the market thinks economic activity is going to be weak," Hurley said.

Stocks in France, England and Germany fell on more signs of division between European leaders. Germany and France proposed managing their shared currency through meetings of nations' leaders, rather than by a central bureaucracy. The chief of the existing bureaucracy balked at the proposal.

Persistent squabbling over financial policy has been a major obstacle to achieving a lasting solution to Europe's debt crisis. France and Germany, the currency union's strongest economies, want countries to coordinate their spending and borrowing more closely. Others see that as a threat to sovereignty.

Many European leaders and traders appear convinced that Greece will default in the coming weeks or months. Greece's lenders and neighbors are preparing as best they can to prevent that from causing a worldwide financial panic.

As a result, traders have reacted strongly to news and rumors out of Europe about how the crisis is being addressed. Markets gyrated wildly this summer in some of the most volatile trading on record. The Dow Jones industrial average swung more than 100 points in more than half of the trading days this quarter.

Traders also have made big moves in response to U.S. economic data, which has mostly suggested a slowdown. A recession in the U.S. looks increasingly likely, mainly because of Europe's struggles and signs of weakness in developing countries like China that have been driving global economic growth.

The government said Friday U.S. consumers spent slightly more in August, but earned less for the first time in nearly two years. That suggests that people are tapping their savings to pay for costlier gasoline and offset lost wages. The savings rate fell to its lowest level since late 2009.

Ingersoll-Rand plunged 14 percent, the most of any stock in the S&P 500 index, after cutting its profit forecast for the third and fourth quarters. The machinery maker said North American sales of climate-control and security products have been weaker than expected.

Micron Technology Inc. fell 12 percent after the chipmaker disappointed investors with a quarterly loss. Analysts had expected a profit. Sales were hurt as the company transitions to selling a newer array of memory chips.

The owners of the Dow Jones industrial average and the S&P indexes are in advanced talks to combine their businesses in a joint venture, according to several news reports Friday. A combination would put the world's most closely watched financial market indicators into one operation.

McGraw-Hill Cos., which owns the S&P Indices, and CME Group Inc., which owns the Dow Jones industrial average and other Dow Jones-branded indexes, are talking about creating a merged business that would be managed by McGraw-Hill, the Wall Street Journal reported.