By Dan Strumpf And Saumya Vaishampayan
U.S. stocks fell Thursday, as mixed economic readings offered
further signs that the U.S. economy has hit a rough patch.
The Dow Jones Industrial Average lost 94 points, or 0.5%, to
17941 in midday trading. The S&P 500 index dropped 12 points,
or 0.6%, to 2095. The Nasdaq Composite Index shed 50 points, or 1%,
to 4974.
Investors received a flurry of data Thursday underscoring a
recent downshift in the U.S. economy. While weekly jobless claims
fell to the lowest level in 15 years, a report on consumer spending
showed a smaller-than-expected pickup in March, while inflation
undershot the Federal Reserve's 2% target for the 35th month in a
row. The data came one day after the Commerce Department reported
the U.S. economy grew just 0.2% during the first three months of
the year, well below expectations.
"People are still kind of smarting from the GDP number," said
Ted Weisberg, a trader at Seaport Securities. "You can wrap any
excuse around bad economic numbers, but at the end of the day
they're just excuses."
Information technology stocks posted some of the biggest losses
Thursday as shares of Apple Inc. sank 2.2%. The pullback follows a
report from The Wall Street Journal that a key component of the
Apple Watch made by one of two suppliers was found to be defective.
The broader S&P 500 Information Technology index lost 1%.
Following the dour economic data, the Russell 2000 index of
small-capitalization stocks also lost ground, falling 1.3%. The
business prospects of smaller companies are often more closely
aligned with the U.S. economy.
Thursday's decline is the second straight loss for stocks, but
both the S&P 500 and the Nasdaq Composite remain close to
all-time highs reached just last week. On Wednesday, the Dow
slipped 0.4%.
European stocks rebounded from Wednesday's steep losses.
Germany's DAX added 0.2%, while France's CAC 40 gained 0.1%.
For months, investors have been calling for a pickup in
spending, as consumers benefit from lower oil prices. While oil
prices have rebounded in recent weeks, they still remain down about
45% from last June. Increased spending could boost corporate
revenues, and in turn, profits.
"What's been interesting is the buildup in the savings rate over
the last couple of months and the fact that consumers have not yet
begun to spend that supposed windfall from gasoline prices coming
down," said Ben Pace, chief investment officer of HPM Partners,
which manages $6 billion. He said he continued to favor consumer
discretionary stocks as he expects spending to eventually increase,
also driven by improvement in the labor market.
Crude-oil futures on Thursday rose 1.1% to $59.21 a barrel. Gold
futures fell 2.5% to $1179.90 an ounce.
The yield on the 10-year Treasury note rose to 2.096% from
2.035% on Wednesday. Yields rise as prices fall.
Exxon Mobil Corp., the biggest U.S. oil company, posted sharp
declines in profit and revenue in the first quarter as it contended
with a slump in oil prices. Shares swung between gains and losses,
recently rising 0.2%.
Shares of Viacom Inc. fell 2.3% after the media company said it
swung to a loss in its March quarter and took a hefty charge to
restructure its business.
Time Warner Cable Inc. posted a disappointing profit and revenue
for the first quarter. Shares fell 0.6%.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
Access Investor Kit for Apple, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0378331005
Access Investor Kit for The Dow Chemical Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2605431038
Access Investor Kit for Exxon Mobil Corporation
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30231G1022
Access Investor Kit for Viacom, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US92553P1021
Access Investor Kit for Viacom, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US92553P2011