Wall Street slips on last day of strong September

NEW YORK (Reuters) - Stocks dipped on Friday as money managers locked in profits on the last trading day of a strong September, while concerns surfaced about the strength of profits during a turbulent third quarter.

Shares of technology, energy and material companies fell as investors took profits on the best-performing sectors for September, traditionally one of the weakest months for stocks. This September brought the biggest gains since 1998.

Stocks have climbed back from steep losses in late July and August, with the Standard & Poor's 500 Index .SPX within about 2 percent of its all-time high.

But the end of the third quarter also stirred anxiety about corporate earnings during the late summer, when several credit markets seized up and the housing slump deepened.

"People are probably going to pull a little off the table, given how strong of a month it was. If you look at the names trading off today, a lot of them are ones that have had strong runs," said Owen Fitzpatrick, head of the U.S. Equity Group at Deutsche Bank Private Wealth Management, in New York.

"We're also transitioning into the earnings season shortly. There is a general concern the weakening economy could mean results come in a little weaker than expected, although we're thinking that we'll once again come in above expectations."

The third-quarter profit reporting period kicks in during the second week of October.

The Dow Jones industrial average .DJI fell 17.31 points, or 0.12 percent, to end at 13,895.63. The Standard & Poor's 500 Index .SPX declined 4.63 points, or 0.30 percent, to 1,526.75. The Nasdaq Composite Index .IXIC dropped 8.09 points, or 0.30 percent, to 2,701.50.

Among tech shares, Apple Inc (AAPL.O) was one of the biggest drags on the Nasdaq 100 index, falling 0.7 percent to $153.47, while shares of Hewlett-Packard (HPQ.N) fell 1 percent to $49.78 on the New York Stock Exchange. Shares of AT&T (T.N) were among the biggest decliners in the Dow and the S&P 500, falling 1.2 percent to $42.31.

A SEPTEMBER TO REMEMBER

For the month, the Dow rose 4 percent, the S&P 500 gained 3.6 percent and the Nasdaq gained 4.1 percent.

It was the best September for the S&P 500 since 1998. The market was buoyed this month by the Federal Reserve's first cut in the fed funds rate target -- the central bank's main tool for influencing the U.S. economy -- since June 2003. The Fed's decision followed weeks of turbulence stemming from the liquidity squeeze and concerns about the health of the U.S. economy.

For the third quarter, the Dow was up 3.6 percent, the S&P was up 1.6 percent and the Nasdaq was up 3.8 percent. Those levels are down from last quarter, when the S&P advanced 5.8 percent.

For the week, the Dow gained 0.6 percent, the S&P inched up 0.1 percent and Nasdaq climbed 1.1 percent.

DOLLAR'S DOWN, BUT SPENDING'S UP

During the session, concerns about weakness in the dollar also weighed on investors' minds, analysts said.

Sharply higher commodity prices have driven energy and materials shares up in recent weeks. Exxon Mobil Corp. (XOM.N) fell 0.4 percent to close at $92.56 on the New York Stock Exchange. Shares of Freeport-McMoRan Copper & Gold (FCX.N) slid 1.8 percent to $104.89.

U.S. crude oil for November delivery settled on Friday at $81.66 a barrel, down $1.22, or off 1.5 percent, in profit-taking after hitting a new contract high at $83.76 in morning electronic trade.

In economic news, a government report showed a measure of consumer prices closely watched by the Federal Reserve -- the core personal consumption expenditures price index -- in August posted the smallest year-over-year increase in about 3-1/2 years.

The Commerce Department also said U.S. consumers boosted their spending at the strongest rate in four months during August.

Discount retailers' stocks rose, including Target Corp (TGT.N), up 3 percent at $63.57.

Trading was lighter than normal on the NYSE, with about 1.35 billion shares changing hands versus last year's estimated daily average of 1.84 billion. On Nasdaq, about 1.95 billion shares traded, below last year's daily average of 2.02 billion.

Declining stocks outnumbered advancing ones by a ratio of about 9 to 7 on the NYSE and by 3 to 2 on Nasdaq.