Stocks mostly lower after GDP report
NEW YORK — Renewed inflation fears left stocks mixed Thursday as new data on the nation’s gross domestic product bolstered the Federal Reserve’s view that the economy remains strong.
Investors fretted after the Commerce Department revised the nation’s fourth-quarter GDP, which was raised to an annual growth rate of 1.7 percent from an earlier 1.6 percent estimate. The slowdown in growth — GDP grew at 4.1 percent in the third quarter — was blamed on an unexpected drop in government spending and business investment.
But while the final GDP reading matched economists’ expectations, the department’s chain deflator — an inflation measure — rose 3.5 percent, above forecasts for 3.3 percent growth. Investors have been watchful for any hint of inflation amid signs that the Federal Reserve will keep hiking interest rates to control price increases.
“I think you’re seeing the market raising its estimates on economic growth, but that also may mean higher rates,” said Brian Gendreau, investment strategist for ING Investment Management. “So we’re still digesting what all this means, and the result so far is a flat-to-lower market.”
The Dow Jones industrial average fell 65.00, or 0.58 percent, to 11,150.70, after opening the session in positive territory.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index lost 2.64, or 0.2 percent, to 1,300.25, while the Nasdaq composite index rose 3.04, or 0.13 percent, to 2,340.82, reaching its second straight five-year high.
The Nasdaq Stock Market Inc. fell $1.74, or 4.2 percent, to $40.11 after abruptly dropping its $4.2 billion offer for London Stock Exchange PLC, but the firm said it reserved the right to make another bid if a rival suitor emerges. NYSE Group Inc., which is seen as a potential bidder for LSE, dropped $1.50 to $78.50.
Web search firm Google Inc. late Wednesday said it plans to sell another 5.3 million shares just two days before its stock is added to the benchmark S&P 500 index. With the additional equity, investors fear Google will have to substantially boost earnings to match Wall Street targets. Google fell $6.54 to $388.44.
Declining issues led advancers by more than 9 to 7 on the New York Stock Exchange, where preliminary consolidated volume of 2.33 billion shares topped the 2.22 billion shares that changed hands Wednesday.
The Russell 2000 index of smaller companies fell 1.58, or 0.21 percent, to 762.59.
Overseas, Japan’s Nikkei stock average gained 0.63 percent, and closed above 17,000 for the first time since Aug. 29, 2000. Britain’s FTSE 100 rose 0.94 percent, Germany’s DAX index added 1.17 percent and France’s CAC-40 was higher by 1.16 percent.