Stocks stall on tepid U.S. economic growth
NEW YORK — The stock market stalled Friday after the U.S. economy didn’t grow as much as hoped and earnings from a handful of big companies failed to rev up investors.
The economy grew at a 2.5 percent annual rate in the first three months of the year, the government said. That was below the 3.1 percent forecast by economists.
The shortfall reinforced the perception the economy is grinding, rather than charging, ahead. Investors have also been troubled by reports in the last month of weaker hiring, slower manufacturing and a drop in factory orders. Many economists see growth slowing to an annual rate of around 2 percent a year for the rest of the year.
U.S. government bonds, where investors seek safety, rose after the report.
“There are some concerns as we head into the summer,” said JJ Kinahan, chief derivatives strategist for TD Ameritrade. “In the last three weeks, we’ve seen numbers that weren’t exactly what you’d love to see.”
Corporate earnings this week have also contained worrisome signs. Many companies missed revenue forecasts from financial analysts, even as they reported higher quarterly profits. For example, Goodyear Tire slipped 3.3 percent to $12.51 Friday after revenue fell short of analysts’ estimates, hurt by lower global tire sales.
Of the companies that have reported earnings so far, 70 percent have exceeded Wall Street’s expectations, compared with a 10-year average of 62 percent, according to S&P Capital IQ. But 43 percent have missed revenue estimates. Just over half of the companies in the S&P 500 have reported quarterly results.
The S&P 500 index dropped 2.92 points, or 0.2 percent, to close at 1,582.24.
The Dow rose 11.75 points, or 0.1 percent, to 14,712.55. The index got a big lift from Chevron. Profit for the U.S. oil company beat expectations of financial analysts in the first quarter, pushing shares up 1.3 percent to $120.04.
Three stocks fell for every two that rose on the New York Stock Exchange.
The Nasdaq composite fell 10.72 points to 3,279.26, a decline of 0.3 percent. The index is 2.3 percent higher this week.