NEW YORK (AP) — U.S. stocks dropped Wednesday following news that the economy skidded to a near halt in the first three months of the year, battered by harsh weather, plunging exports and sharp cutbacks in oil and gas drilling. Stocks stayed lower after the Federal Reserve downgraded its assessment of the economy and kept its key interest rate unchanged.
KEEPING SCORE: The Standard & Poor’s 500 index fell eight points, or 0.4 percent, to 2,106, as of 2:11 p.m. Eastern. The Dow Jones industrial average fell 65 points, or 0.4 percent, or 18,042 points. The Nasdaq fell 32 points, or 0.7 percent, to 5,022.
US ECONOMY: The overall economy grew at a barely discernible annual rate of 0.2 percent in the January-March quarter, the Commerce Department reported Wednesday. That is the poorest showing in a year and down from 2.2 percent growth in the fourth quarter. Plummeting exports pulled growth down by nearly a full percentage point.
FED STATEMENT: The Fed gave no indication that it is any closer to raising a key rate from its six-year low near zero. Policy makers noted that growth had slowed, business investment softened and exports declined. In a statement after their two-day meeting, they repeated language that they need to be “reasonably confident” that low inflation will move back to its 2 percent target.
THE QUOTE: Stocks have struggled to maintain their upward momentum this year, after climbing almost 30 percent in 2013 and 11.4 percent last year.
So far, the S&P 500 index has gained only 2.3 percent in the first four months of the year after fluctuating between small gains and losses. That trend may continue for a while, says said Katrina Lamb, head of investment strategy and research at MV Financial, a wealth management firm.
“We’re in a period of indecisiveness, where things could stay muddled for a while, without any really compelling case to either drive things back up … or, on the other hand, to send things back into a major pullback,” Lamb said.
EARNINGS: U.S. corporate earnings were mixed. Starwood Hotels and Resorts surged after the company reported earnings that surpassed analysts’ expectations and its board of directors said that it would explore a “full range” of strategic and financial options for the company. The company’s stock climbed $6.35, or 7.8 percent, to $87.14.
Buffalo Wild Wings slumped $23.56, or 12.8 percent, to $159 after the company reported disappointing first-quarter results. The company said its net income and revenue grew. But the price of chicken wings surged and Buffalo Wild Wings’ costs were also boosted by the chain’s expansion.
THE THIRD DIMENSION: Stratasys, a maker of 3-D printers, plunged after the company warned investors late Tuesday that its profit and revenues would fall short of analysts’ estimates. The company blamed a decline in capital spending and the strengthening dollar for a weaker-than-expected performance. Stratasys dropped $10.22, or 20 percent, to $41.07.
EUROPE’S DAY: France’s CAC-40 fell 2.6 percent and Germany’s DAX fell 3.2 percent. Britain’s FTSE 100 edged down 1.2 percent. Markets in Europe fell as the euro rebounded against the dollar following the weak U.S. GDP figures.
CURRENCIES: The euro surged to $1.1122 from $1.0972, its highest level against the U.S. currency in almost two months. The dollar fell to 118.73 yen from 118.82 yen late Tuesday.
BONDS: Government bond prices fell. The yield on the 10-year Treasury note rose to 2.04 percent from 2 percent late Tuesday.
ENERGY: U.S. benchmark crude oil rose $1.44 to $58.54 a barrel in New York. Brent crude rose $1.19 to $66.84 a barrel in London.
METALS: Precious and industrial metals futures were little changed. Gold fell $3.90 to settle at $1,210 an ounce, silver rose eight cents to $16.67 an ounce and copper rose two cents to $2.80 an ounce.
