Stocks close out best quarter in five years

NEW YORK» U.S. stocks ended back where they started Friday as the stock market wrapped up its best quarter in almost five years. Electric car maker Tesla plunged after federal regulators moved to oust CEO Elon Musk following his tweet last month saying that he was close to a deal to take Tesla private.

Health care companies did better than any part of the market during the third quarter and they continued to rise Friday, while technology companies rose as chipmakers also traded higher. Facebook said it discovered a security breach in which 50 million accounts were accessed by unknown attackers, and its stock fell again, ending its worst quarterly run in six years.

Global banks fell and European stocks skidded after Italy’s new government announced a big increase in spending. Italy’s main stock index fell almost 4 percent as investors worried that the government’s plan will lead to a clash with European Union leaders who want Italy to reduce its debt level.

Through the third quarter, pain in other markets led to gains for U.S. stocks, and that was true again Friday. The S&P 500 rose 7.2 percent, its biggest increase since the end of 2013.

One reason is that investors are worried about other regions, especially emerging markets. The currencies of Turkey and Argentina both dropped during the quarter, and investors worried that their currency and economic problems would harm the rest of the world.

“Investors do pivot to the U.S. when they have concerns about other regions,” said Marina Severinovsky, an investment strategist at Schroders. But emerging markets stocks have bounced back somewhat over the last two weeks, and Severinovsky said they might do better than U.S. stocks in the fourth quarter.

“The pessimism around those regions is probably too much,” she said.

The S&P 500 index inched down 0.02 points to 2,913.98. The Dow Jones industrial average rose 18.38 points, or 0.1 percent, to 26,458.31. The Nasdaq composite added 4.38 points, or less than 0.1 percent, to 8,046.35. The Russell 2000 index of smallercompany stocks gained 6.04 points, or 0.4 percent, to 1,696.57.

The spending plans announced by Italy’s new government would expand its budget deficit. European Union leaders want Italy to bring down its debt level, which is the highest of any EU country after Greece.

Italy’s FTSE MIB sank 3.7 percent, while the German DAX gave up 1.5 percent. France’s CAC 40 lost 0.8 percent, and the FTSE 100 index in Great Britain shed 0.5 percent.

Yields on Italian government bonds rose sharply, a sign of lower investor confidence in the government’s financial strength. The yield on Italy’s 10year bond jumped to 3.14 percent from 2.89 percent, a huge move.