GDP report leaves markets sluggish
Stocks finished largely flat Thursday after a weak reading of the nation’s gross domestic product muted Wall Street’s enthusiasm over a new spate of acquisitions. Technology stocks fared better than most, however.
The Commerce Department’s latest estimate of first-quarter GDP was 0.6 percent, lower than the average economist estimate of 0.8 percent and the 1.3 percent the government projected in April.
The fact that first-quarter growth has been the most sluggish since the last quarter of 2002, but that the Dow Jones industrial average has nonetheless surged more than 9 percent this year, made some investors pause.
“There’s friction between those two numbers. That’s why investors are a little bit worried, and why we’re not hitting home runs every day,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.
Still, most on Wall Street expect growth to pick up later in the year, and remain optimistic about the stock market thanks to the unrelenting wave of takeovers, which are on track to beat last year’s record tab of $4 trillion.
On Thursday, banking company Wachovia Corp. said it would acquire A.G. Edwards Inc. for $6.8 billion in cash and stock to form the second-largest retail stock brokerage in the country. And payroll processor Ceridian Corp. said late Wednesday it will be bought out by investment firm Thomas H. Lee Partners LP and insurance provider Fidelity National Financial Inc. for about $5.3 billion.
The Dow Jones industrial average slipped 5.44, or 0.04 percent, to 13,627.64, after reaching a new trading high of 13,673.07. On Wednesday, the Dow rose more than 111 points and set a new closing high of 13,633.08.
Broader stock indicators managed gains.
The Standard & Poor’s 500 index advanced 0.39, or 0.03 percent, to 1,530.62, after soaring to a record close Wednesday for the first time since March 2000.
The technology-dominated Nasdaq composite index showed more pronounced movement, rising 11.93, or 0.46 percent, to 2,604.52. Gains in companies like Apple Inc. helped lift the Nasdaq. Apple rose $2.42, or 2 percent, to $121.19, after the company announced developments about its online products that pleased investors.
May proved a strong month for the major indexes. The Dow industrials rose 4.3 percent, giving the blue chips a year-to-date gain of 9.3 percent. The S&P 500 gained 3.3 percent in May and is up 7.9 percent for the year. The Nasdaq added 3.2 percent, putting its year-to-date gain at 7.8 percent.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume on the final day of the month came to a heavy 3.27 billion shares compared with 2.86 billion Monday.
The Russell 2000 index of smaller companies rose 3.83, or 0.45 percent, to 847.18, reaching its second-straight record close.
Chinese stocks rebounded Thursday after a sharp drop a day earlier. The Shanghai Composite Index rose 1.4 percent.
Japan’s Nikkei stock average rose 1.63 percent. Britain’s FTSE 100 rose 0.29 percent, Germany’s DAX index rose 1.52 percent, and France’s CAC-40 rose 1.02 percent.