By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks dropped on Friday after a
report showed the U.S. economy expanded at a slower pace in the
first quarter than expected and a gauge of consumer sentiment
declined in April.
The S&P 500 index (SPX) fell 2.43 points, or 0.2%, to
1,582.70 in afternoon trade, with consumer staples the top gainer
among its 10 major industry groups. Materials was the worst
performing sector.
Despite Friday's pullback, the S&P 500 index was on track to
end the week with gains of 1.8%.
"What's happening today is a little bit of jitters on the
economic front and a little bit of jitters on the earnings front,"
said Adam Sarhan, chief executive of Sarhan Capital.
Investors are also growing more concerned over a
steeper-than-expected downturn in Europe given recent data, he
said.
More than 325 million shares traded on the New York Stock
Exchange by 2 p.m. Eastern. Composite volume topped 1.9
billion.
The technology-heavy Nasdaq Composite index (RIXF) shed 10.52
points, or 0.3%, to 3,279.15.
The Dow Jones Industrial Average (DJI) fluctuated between small
gains and losses. The Dow was last up 20 points to 14,720, with
Hewlett-Packard Co. (HPQ) up 3.2%, leading gainers in the 30-stock
blue-chip index.
Chevron Corp.(CVX) was another gainer in the Dow, rising 1.2%.
The oil major said its first-quarter earnings fell to $6.2 billion,
or $3.18 per share, from $6.5 billion, or $3.27 a share, in the
same period a year ago, but the results still exceeded analyst
expectations.
3M Co. (MMM) and American Express Co. (AXP) were the biggest
decliners in the Dow, dropping 1% and 0.7%, respectively.
The Commerce Department said before the opening bell that gross
domestic product grew at a 2.5% pace in the first three months of
2013, up from 0.4% in the fourth quarter. Economists surveyed by
MarketWatch had forecast GDP growth of 3.2%. See: Breaking down the
GDP report in charts.
"The disappointment will push back expectations of when the Fed
will start to withdraw its stimulus, especially as recent data
suggest the rate of growth could weaken again in the second
quarter," said Chris Williamson, chief economist at Markit,
referring to the Federal Reserve's bond-buying program, which is
aimed at boosting economic growth and lowering unemployment. The
Federal Open Market Committee is due to hold a meeting on monetary
policy on Tuesday and Wednesday, and it's expected to keep its bond
buying unchanged at $85 billion a month.
Shortly after Friday's opening bell, the University of
Michigan-Thomson Reuters consumer-sentiment gauge fell to a final
April reading of 76.4, the lowest since January, from a final March
reading of 78.6. Economists had expected it to be even lower.
Among individual stock moves, PerkinElmer Inc. (PKI) was the top
decliner in the S&P 500, dropping 12% after the maker of
health-testing equipment lowered its full-year outlook.
Expedia Inc. shares (EXPE) slumped more than 10% after the
online travel site said its first-quarter loss widened.
Shares of Amazon.com Inc.(AMZN) fell 7% as the e-commerce group
said late Thursday it may report a second-quarter operating
loss.
J.C. Penney Co.(JCP) rallied nearly 9%, making it the top gainer
in the S&P 500 after hedge-fund investor George Soros reported
a 7.9% stake in the struggling retailer.
D.R. Horton Inc.(DHI) shares jumped 7.3% after the company
posted a surge in fiscal second-quarter profit and a 34% rise in
orders.
Sarhan Capital's Sarhan noted that 70% of companies that have
reported so far have beaten expectations, and earnings are on track
to come in 1.1% lower versus the first quarter of 2012.
"If that happens, it'll be the first annual decline on a
year-on-year basis since 2009," he said.
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