Stocks close down on last day of week, month, quarter

— -- NEW YORK -- Stocks ended lower Friday, the last trading day of the week, and the month and the third quarter. Investors were grappling with the same things they have for most of the past quarter: mixed news on the economy and the European debt crisis.

The Dow Jones industrial average ended down 51.07 points, or 0.4%, to 13,434.90. The broader Standard & Poor's 500 index lost 6.63 points for the day, or 0.5%, to 1,440.52. The tech-laden Nasdaq composite index fell 20.37 points, or 0.7%, to finish at 3,116.23.

Story: Stocks close out sweet quarter on sour note

It was the biggest weekly drop in four months for all three major indexes even though they finished the quarter with modest gains.

The Dow Jones industrial average had been down more than 115 points in morning trading, a 0.8% drop, before recovering more than half of those losses before the close. The recovery in U.S. stocks came after European markets closed and Spain announced the results of stress tests of 14 of its country's banks. The audit showed a capital shortfall close of 59.3 billion euros ($76.3 billion), slightly less than the expected 60 billion euros ($77 billion).

Investors were disappointed Friday after a report on the economy from purchasing managers in the Midwest showing an unexpected sharp drop in its index. The Chicago purchasing management index fell to 49.7 in September from 53 in August, suggesting economic conditions are weakening. A reading below 50 over time indicates an economy that is not growing.

Investors had earlier learned that consumer spending rose 0.5% in August -- the biggest jump since February. But the Commerce Department said most of the increase went for higher gas prices.That meant less growth elsewhere for strained household budgets. Spending on items expected to last at least three years like appliances and automobiles, rose 0.3%. And incomes rose just 0.1%, reflecting weak job growth.

One exception to the sour mood on Wall Street: a 5.5% pop to just over $7.50 a share of Research in Motion, maker of Blackberry smartphones. In pre-market trading, the stock had been up more than 15%. The struggling device maker Thursday said sales were better than forecast, resulting in a smaller-than-expected quarterly loss. RIM's revenue came in at $2.9 billion, creating a loss of 27 cents a share.

Trading is often complicated at the financial quarter's end as it is the deadline for certain trades and agreements to be settled. This sometimes involves buying and selling large amounts of stocks at the last minute in order to make a profit on a deal.

Seasonally speaking, the stock market has sidestepped the September blues, shooting up 3% in what historically has been the worst month for stocks.

Starting Monday, Wall Street moves on to the fourth quarter, the best three-month span for returns over the past 20, 50 and 100 years, according to Bespoke Investment Group.

While turning the page of the calendar doesn't guarantee gains, the market's seasonal performance tendencies do provide a bullish road map. The final three months of the year have been especially kind to the Dow Jones industrials over the past 20 years.

The Dow has risen 5.3% on average and been up 80% of the time.But October, November and December this year are chock full of potentially big market-moving events that will require investors to stay alert and not get too complacent.