Wall Street stocks slumped on Friday on persistent concerns over economic recovery, erasing early gains following data showing a stronger-than-expected US growth in the final quarter of last year. The Dow Jones Industrial Average fell 53.13 points (0.52 percent) to 10,067.33, posting losses in five of the last seven sessions.
The NASDAQ composite dipped 31.65 points (1.45 percent) to 2,147.35 while the Standard & Poor’s 500 index slipped 10.66 points (0.98 percent) to 1,073.87.
All three key indexes were up in early trading as the market initially cheered a government report showing the US economy roaring to life in the fourth quarter with a 5.7 percent growth rate on the back of brisk business spending to replenish inventories.
US Department of Commerce figures showed growth accelerated from the 2.2 percent pace in the third quarter, when the economy expanded for the first time after four quarters of contraction and the worst recession in decades.
The gains, however, began evaporating two hours after the opening bell.
“On balance, the fourth quarter GDP report was encouraging as it showed stronger growth versus the prior quarter and little inflation pressure,” said Patrick O’Hare of Briefing.com.
But he noted that the report failed to convince the market that the economy is out of the woods.
“With the unemployment rate at 10 percent, misgivings about the sustainability of the upturn will remain,” he said.
“Continued global economic uncertainty” prompted traders to sell stocks into Friday’s early advance as traders waited “for clearer signs about what lies ahead for the global recovery,” analysts at Charles Schwab & Co said in a client note.
Wells Fargo Advisors chief market strategist Al Goldman said the stock market had “run too far, too fast and needed a rest” after strong gains in the past 10 months and that a “correction” may be underway.
“In a correction, the mood turns to a glass is half empty and thus good news is ignored and negative news receives all the focus,” he said.
Among losers was online giant Amazon, down 0.49 percent to US$125.41 even after reporting better-than-expected results.
Software kingpin Microsoft also fell, by 3.36 percent to US$28.18 despite better sales expectations, as the tech sector became the biggest loser on Friday.
Chevron was down 1.53 percent to US$72.12 after its fourth-quarter profit fell 37 percent as higher crude prices led to huge losses in its refining business.
Wal-Mart was among the few gainers, rising 1.56 percent to US$53.43 after a “buy” recommendation from Goldman Sachs analysts.
The bond market rose. The yield on the 10-year Treasury bond fell to 3.609 percent from 3.658 percent on Thursday and that for the 30-year bond dipped to 4.510 percent from 4.569 percent.
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