Stocks Open Fourth Quarter With More Gains

Stocks kicked off the final quarter of the year with moderate gains Friday as more encouraging data on consumer spending, consumer sentiment and auto sales were partly offset by a slowdown in manufacturing activity.

The blue-chip Dow Jones Industrial Average ($INDU) added 42 points, or 0.4%, to close at 10,830. The broader S&P 500 ($INX) rose five points, or 0.4%, to 1,146. The tech-heavy Nasdaq Composite ($COMPX) gained two points to finish at 2,371.

Better-than-expected readings on personal income, personal spending and consumer sentiment helped lift equities, damped somewhat by a modest decline in September factory orders. The Institute for Supply Management said its manufacturing index dipped to 54.4 from 56.3 in August. Although factory orders are still growing, they are doing so at a slower rate.

A Third-Quarter Earnings Spark?

Stocks notched their best September since 1939 -- and enjoyed their best quarterly performance since the third quarter of last year -- in no small part because second-quarter earnings were so strong, says Cort Gwon, director of trading strategies and research at FBN Securities.

An improving macroeconomic outlook, a pickup in deal activity and a dovish Federal Reserve are all contributing to the current stock market rally, Gwon says, and yet there's still a great deal of cash sitting in bonds -- or on the sidelines entirely. If the V-shaped recovery in corporate profits continues apace, third-quarter earnings season could be just the spark the market needs to rally into year-end.

For more on Gwon's outlook from the floor of the New York Stock Exchange (NYX), see the video below.