IBJNews

Stocks head lower on tepid U.S. economic growth

Back to TopCommentsE-mailPrintBookmark and Share

Stock prices were mostly lower on Friday after several companies, including Amazon.com, released weak earnings and the government reported that the U.S. economy expanded at a slower rate than economists were expecting.

The economy grew at an annual rate of 2.5 percent in the first three months of the year, the Commerce Department said. Much of the gain came from a jump in consumer spending. That marked a healthy rebound from the anemic 0.4 percent growth rate in the October-December quarter, but still lagged the 3.1 percent rate forecast by economists polled by FactSet, a financial data provider.

While the report is backward-looking, it strengthens the perception that the economy is grinding, rather than charging, ahead. Stocks started the year with a surge that pushed both the Dow Jones industrial average and the Standard & Poor's 500 index to record highs April 11. The advance has slowed since then as signs emerged that the economy is beginning to flag.

Corporate earnings are also driving stock trading this week.

Among the big names that investors were focusing on Friday, Amazon.com shares fell 7 percent, to $255.10 each, after the company said it may report an operating loss in the second quarter. The online retailer's income fell in the first quarter as it continued to spend heavily on order fulfillment and rights to digital content. Expedia fell 8.8 percent, to $59.28, after the online travel company's costs rose.

Homebuilder D.R. Horton surged 5.8 percent, to $25.95, after saying its income nearly tripled thanks to a continuing recovery the housing market. The results were well ahead of the forecasts of financial analysts who follow the company.

Of the companies that have reported earnings so far, 69 percent have exceeded Wall Street's expectations, compared to a 10-year average of 62 percent, according to S&P Capital IQ. However, many have missed analysts' revenue estimates. That's a warning sign to investors that some of the improvement in earnings is coming from cost-cutting instead of increased sales.

The Dow was up 11 points, or 0.1 percent, at 14,713 in late-morning trading. The S&P 500 index fell four points to 1,581. The NASDAQ composite was down 13 points, at 3,276, a decline of 0.4 percent.

Stocks are still up for the month, but the gains are far below those made in the first three months of the year. The Dow and the S&P 500 are up 0.9 percent and 0.8 percent, respectively, in April, far below the average gains of more than 3 percent they posted in January, February and March.

"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 have seen numbers that weren't exactly what you'd love to see."

Slower hiring in the U.S. and weaker manufacturing held back stocks in April. The markets logged their biggest weekly decline in more than five months last week on concerns that global growth is faltering. China said its economy slowed in the first quarter.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

ADVERTISEMENT