Wall Street falls on growth fears

Muted consumer spending numbers cast shadow over economy, stocks close lower.

US stocks have closed slightly lower, as investors weighed the outlook for economic growth.

At the closing bell, the Dow Jones Industrial Average fell 21.38 points, or 0.1%, to 16,846.13. The S&P 500 index fell 2.31 points, or 0.1%, to 1,957.22, and the Nasdaq Composite Index slipped 0.71 point, or less than 0.1%, to 4,379.05.

Trading was bumpy during Thursday's session. Stocks took an unexpected dive in the first 30 minutes of trading, when the Dow dropped more than 120 points, but benchmarks pared most of those losses over the rest of the day.

Traders said that early sell-off appeared to be the result of one or more large institutional investors pulling some money out of stocks as a portfolio allocation shift ahead of quarter end, rather than a response to any particular news.

"A lot of the [trading] flows are institutional," said Jeff Yu, head of single-stock derivatives trading at UBS AG. "That's typical for quarter-end."

Broadly, investors are keeping a close eye on projections for economic growth. Among the factors making them uneasy Thursday was a reading on personal spending that missed forecasts, and one indicator of inflation that rose. That came after a Wednesday reading on first-quarter economic growth was worse than expected.

"In the third and fourth quarters, we should see [strong] growth, but anything that calls that into question...will be a problem," said David Donabedian, chief investment officer of Atlantic Trust, which manages $24 billion.

Personal spending rose by less than expected in May, edging up 0.2%, while a 0.4% rise was expected. Personal income rose in line with expectations, while the PCE price index, one measure of inflation, rose 1.8% from a year ago and 0.2% from April. Initial claims for jobless benefits in the latest week slipped 2,000 to 312,000. A decline to 310,000 had been forecast.

Still, stocks remained on track for a strong month, with the S&P 500 up 1.7% for June. And even at the index's Thursday-morning low, it was still just 0.9% below its all-time closing high of 1962.87 reached Friday.

"This is a small breather in a very stubbornly bullish market," said UBS's Mr Yu.

The yield on the 10-year U.S. Treasury note fell to 2.525%. Bond yields move inversely to prices.

Gold futures shed 0.5% to $US1,316.10 an ounce. Crude-oil futures fell 0.6% to $US105.84 a barrel. The dollar gained against the euro, but ticked lower against the yen.

European markets edged lower, with the Stoxx Europe 600 slipping less than 0.1%. Asian markets were broadly higher, with China's Shanghai Composite advancing 0.7%, and Japan's Nikkei Stock Average tacking on 0.3%.

In corporate news, video-camera maker GoPro rallied 31% from its initial public offering price of $24 a share, which was the high end of its expected price range.

Bed Bath Beyond shares slumped 7.2% after the home-furnishings retailer reported disappointing fiscal first-quarter earnings and revenue late Wednesday and provided a downbeat second-quarter earnings outlook.

Alcoa rose 2.7% after the aluminum giant announced a deal to buy aerospace-parts maker Firth Rixson for $2.85 billion in cash and stock.

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