U.S. stocks fell on Friday after investors sold shares to lock in gains at the end of equities' robust third quarter and as Spanish banks' stress tests were mostly within expectations.
An independent audit of Spain's 14 main banks showed they had 59.3 billion euros ($76.3 billion) in extra capital to ride out a serious economic downturn, nearly matching expectations.
However, Moody's review of Spain's credit rating, due later in the day, could add to the nation's challenges in dealing with its debt.
"All Europe, all day, every day for months has been an issue for the markets. and you see what the progress of the returns has been - it has mostly been around ECB and Fed intervention announcements," said Hugh Anderson, managing director at HighTower Advisors in Las Vegas, Nevada.
"The rest of the time, the fundamentals come to the fore and grind the market back down."
Investors also grappled with another round of disappointing domestic economic data, following a weaker-than-expected read on the Institute for Supply Management-Chicago's index of Midwest business activity, which fell to 49.7 in September from 53.0 in August.
The final read on the Thomson Reuters/University of Michigan survey on consumer sentiment was also less than expected, though it advanced to its highest in four months.
U.S. consumer spending rose in August by the most in six months as households stretched to pay for higher gasoline prices, according to a Commerce Department report.
Recent protests in Greece and Spain against austerity plans have also heightened investors' concerns as the turmoil could impede political maneuvering.
The Dow Jones industrial average <.DJI> dropped 51.49 points, or 0.38 percent, to 13,434.48. The Standard & Poor's 500 Index <.SPX> lost 5.03 points, or 0.35 percent, to 1,442.12. The Nasdaq Composite Index <.IXIC> fell 11.38 points, or 0.36 percent, to 3,125.22.
In contrast to Friday's downtrend, the third quarter has been a strong period for U.S. stocks. The S&P 500 has advanced 5.9 percent over the past three months.
Trading was light on the quarter's last day, when money managers reposition their portfolios.
Reflecting the defensive tone, nine of the 10 S&P sectors fell. Only the S&P utilities index <.GSPU> was positive, up just 0.1 percent.
The decline in the S&P technology sector index <.GSPT> was limited, as Accenture PLC climbed 7.5 percent to $70.30. Accenture's gain followed its forecast of full-year earnings higher than analysts' estimates as the company bolsters its outsourcing business.
Elsewhere in the tech arena, U.S.-listed shares of Research in Motion jumped 7.8 percent to $7.70 a day after a smaller-than-expected quarterly loss.
Nike Inc warned of slowing orders in China, becoming the latest company to sound a note of caution about how economic weakness in the world's second-largest economy was affecting its business. Nike's stock fell 0.7 to $95.30.
Wall Street's gains in the third quarter were largely linked to expectations for measures by central banks around the world to boost their economies.
The S&P 500 is down 1.2 percent this week so far, putting the index on track for its second consecutive weekly decline and worst weekly percentage drop since early June as markets have struggled to find traction to the upside after the Fed's latest stimulus plan so far was announced on September 13.
(Editing by Jan Paschal)