The month of September marks both the close of the third quarter and an anticipated return of investors coming back from vacation. Despite faltering on the last day, stocks and exchange traded funds (ETFs) just closed their best quarter since 1998.

For the month, the Dow Jones Industrial Average gained 2.3%. The S&P 500 rose 3.6%, while the Nasdaq gained 5.6%. For the quarter, the Dow gained 14.2%, the S&P increased 14.5% and the Nasdaq added 15%.

The last time the Dow saw such a large quarterly surge was back in the fourth quarter of 1998, when it rose 17.2% as the dot-com bubble was forming.

A number of measures were enacted this quarter that helped spur the rally. Positive statements about the recession likely being over from Federal Reserve Chairman Ben Bernanke contributed some optimism. The popular “cash for clunkers” program helped spur auto sales and managed to get ordinarily tight-fisted consumers to open their wallets.

Gold prices have also gained, surging above the $1,000 an ounce mark on a combination of safe-haven seeking, hedging of dollar weakness, industrial demand and jewelry buying.

On the downside, while Wall Street has staged a nice rally, there are still concerns about Main Street, as unemployment continues to rise. The dollar has also been weakening, which is fueling fears of inflation down the road.

Among the top sectors for the month were solar energy, which rose 15.7%; gold miners, which rose 14.5%; and oil and gas equipment and services, which rose about 13%. The weakest sectors in September were homebuilders, which fell about 4%; gasoline, which declined 3.7%; and agriculture, which lost 2.3%.

Among the top sectors for the quarter were real estate investment trusts (REITs), which rose about 32%; global financials, which gained about 28.4%; and steel, which rose 24.7%. The weakest sectors in the third quarter were international agriculture, which fell 4.4%; oil, which lost 3.5%; and energy, which declined 1.7%.

For our full September ETF Performance report, click here.

Tags: ETF Performance Reports