Stocks close mixed after GDP data revised
NEW YORK » Renewed inflation fears left stocks mixed yesterday 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 U.S. 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.
Declining issues led advancers by more than 9 to 7 on the New York Stock Exchange, where consolidated volume of 2.39 billion shares topped the 2.29 billion shares that changed hands Wednesday.
The Russell 2000 index of smaller companies fell 1.58, or 0.21 percent, to 762.59.
Bonds continued falling amid concerns that rising yields will draw away interest in stocks, with the yield on the 10-year Treasury note jumping to 4.86 percent from 4.80 percent late Wednesday. The dollar was mostly lower against other major currencies, and gold prices rebounded.
Crude futures pushed past $67 per barrel and reached a two-month high as investors worried about political tension over Iran's nuclear arms program and a fourth straight weekly drop in U.S. gasoline reserves. A barrel of light crude settled at $67.15, up 70 cents, on the New York Mercantile Exchange.
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.