Stocks sputter on tepid US economic growth

NEW YORK (AP) ? The stock market sputtered Friday after the U.S. economy didn't grow as much as hoped. Neither did earnings from a handful of big companies.

Economic growth accelerated to a 2.5 percent annual rate in the first three months of the year, the government said. But it was below the 3.1 percent forecast by economists.

The shortfall reinforced the perception that 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.

"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."

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 3.4 percent to $12.49 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. However, 43 percent have missed analysts' revenue estimates.

The S&P 500 index fell three points to 1,583, or 0.2 percent, paring its gain for the week to 1.8 percent.

The Dow, however, was up 11 points, or 0.1 percent, at 14,717, lifted by Chevron's stock. Profit for the U.S. oil company beat expectations of financial analysts in the first quarter, pushing shares up $1.29, or 1 percent, to $119.80 on Friday.

The Dow index is 1.2 percent higher this week.

The Nasdaq composite was down 20 points at 3,269, a decline of 0.6 percent. The index is still 2 percent higher this week.

The tech-heavy index has lagged both the Dow and the S&P 500 this year, but led the way higher this week, boosted by Microsoft. The software giant, which makes up 5.3 percent of the Nasdaq, is on track to record its biggest weekly gain since January last year, after reporting earnings April 19 that beat Wall Street expectations and revealing an aggressive push into the computer tablet market.

Even Apple, the largest stock in the Nasdaq, had a good week, advancing 5.8 percent to $413.20, despite posting a decline in quarterly profit Tuesday. Apple accounts for 7.6 percent of the index's value and the weekly gain was its biggest since November.

Among big names that investors were focusing on Friday, Amazon.com fell 7 percent to $255.20 after the company warned of a possible loss in the current quarter. And in the first quarter, the online retailer reported lower income fell as it continued to spend heavily on the rights to digital content. Expedia fell 11 percent to $58.15 after the online travel company's reported a quarterly loss.

Homebuilder D.R. Horton surged 8 percent to $26.48 its income nearly tripled thanks to a continuing recovery the housing market. The results were handily beat the forecasts of financial analysts who follow the company.

J.C. Penney jumped 8.5 percent to $16.52 after the billionaire financier George Soros disclosed that he had taken a 7.9 percent stake in the struggling company.

In government bond trading, the yield on the 10-year Treasury note fell to 1.67 percent from 1.71 percent, its lowest rate of the year.

Source: http://news.yahoo.com/stocks-sputter-tepid-us-economic-growth-184133429.html

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