Stocks posted solid gains for the third quarter, although the ride got bumpy at the end.
Stocks fell five days of the last six, including on Friday, the last trading day of the quarter. But the big indices are still up 4 percent or more for three months. They're ahead 10 percent or more for the year.
Three fourths of Chattanooga's stock-traded companies increased in value during the past three months. Covenant Transport led the gains among local stocks, rising 23 percent in the quarter, while First Security Bank had the worst quarter with its stock falling by 25 percent in value.
Depite all the anxiety about the euro, Iran, and U.S. politics, investors bid most stocks higher in the three months ended Friday.
Actually, those worries are exactly why stocks are up, said Uri Landesman, who runs the Platinum Partners hedge fund. He notes that investors around the world feel that U.S. stocks look pretty good, compared to some of the alternatives.
"People are scared, and 2008 wasn't that long ago, and Europe remains a problem," he said. Those factors "are keeping the market up in the face of some really questionable economic data and questionable behavior by the Fed."
The Federal Reserve Bank buoyed stocks by agreeing to keep interest rates low for at least another two years. The third phase of the central bank's quantitative easing will pump $40 billion a month into the economy.
"The enthusiasm surrounding moves from the Fed and good news on the housing front has led to a stock market that is more concerned with macro issues than actual corporate earnings growth," said Guillemo Araoz, director of equity strategies for Regions Financial, the parent company of one of Chattanooga's biggest banks. "The tone in the market right now is clearly optimistic.
The Commerce Department said Friday that consumer spending rose a half-percent last month, compared to July. That was a big jump -- but it was driven by higher has prices, rather than by spending on clothing, electronics and general merchandise. Consumer spending drives nearly 70 percent of economic activity.
Many investors still worry that the recent gains by stocks aren't justified, considering the risks of a confrontation with Iran, weak corporate profits, and Europe's troubles.
"People are wrestling with that disconnect, and trying to choose which chess pieces to move in anticipation" of whatever they think will happen next, said Lawrence Creatura, portfolio manager at Federated Investors.
"It's been a good quarter," he said, "but at least for the day we seem to be limping across the finish line."
Investors are still concerned about Spain's financial health. The Bank of Spain released an audit Friday showing that seven of the country's banks failed stress tests. Moody's, the credit rating agency, is also expected to weigh in on Spain's creditworthiness, and there are concerns the government's rating will be cut to "junk" status.
For the year so far, the Dow is up 10 percent, the S&P 500 up almost 15 percent, and the Nasdaq is up 20 percent.