U.S. Stocks Fall On Fed Talk, Data; Dow Down Triple Digits
NEW YORK (MarketWatch) -- U.S. stocks skidded lower Thursday after the government revised its estimated growth in gross domestic product for the fourth quarter, with the U.S. economy in 2007 grinding down to its slowest pace in five years.
"The realization of a weaker economy is starting to hit home," said Kevin Giddis, managing director, fixed-income trading at Morgan Keegan & Co. Inc.
The market declines came as Federal Reserve Chairman Ben Bernanke spent a second day on Capitol Hill, with the Fed chief telling lawmakers that rising inflation is making his task more complicated. .
The Dow Jones Industrial Average dropped 128.54 points to 12,565.74, with 25 of its 30 components posting losses, the declines led by American International Group Inc. , off more than 4%.
The Dow's advancing stocks were led by Verizon Communications Inc. and AT&T Inc. , each up more than 2%.
Blue-chip energy stocks also gained, with Chevron Corp. and Exxon Mobil Corp. both edging higher, as the sector overall traded mixed. .
The S&P 500 declined 11.10 points to 1,368.92, while the Nasdaq Composite slid 19.57 points to 2,334.21.
Volume on the New York Stock Exchange neared 740 million, and declining shares outran those advancing about 3 to 1, while almost 500 million shares were exchanged on the Nasdaq, with advancing issues ahead of those declining, 2 to 1.
Already lower amid some weak earnings, including Sprint Nextel's loss of more than $29 billion, stock futures added to their losses in the wake of the GDP data in electronic trade ahead of Wall Street's opening bell. .
In a separate report, the government reported a rise in weekly jobless claims, with those filing for state unemployment benefits rising by 19,000 last week to hit their highest count since late January. .
"Although the four-week average fell by 1,250, the upward trend in this moving average since the end of last month suggests that labor markets remained weak throughout February," said Lehman Brothers economist Drew Matus.
Stocks had a mixed session on Wednesday as the Federal Reserve signaled more rate cuts and expressed caution about the economy and inflation.
On the New York Mercantile Exchange, crude-oil futures rose to trade back above $100 a barrel, as the dollar extended losses against other major currencies.
Crude oil for April delivery gained $2.32 to $101.96. .
Sprint Nextel swung to a fourth-quarter loss of $29.5 billion after taking a non-cash goodwill impairment charge of $29.7 billion as well as other special items. Shares in the group, which also cancelled its dividend, fell nearly 8% in early trading.
Freddie Mac's fourth-quarter loss widened to $2.45 billion from a year-earlier loss of $401 million due to mark-to-market losses of about $3.1 billion and continued weakness in the U.S. housing market.
Sears Holdings Corp. said fourth-quarter profit nearly halved to $426 million from $811 million a year earlier. The company attributed the shortfall to a poor performance of its U.S. Sears stores and Kmart stores.
Deutsche Telecom reported another quarterly loss, but said its business is stabilizing and managed to top forecasts for its underlying profit.
Shares in Apple Inc. were up more than 5% after the company's chief operating office said the company is confident it will meet 2008 targets for iPhone sales and added it isn't permanently married to the single carrier model it has used for the iPhone so far.
Asian markets ended mixed Thursday, with Japanese stocks falling as a stronger yen hurt exporters. European indexes extended losses after the release of U.S. GDP and jobless claims count, with the pan-European Dow Jones Stoxx 600 index off 1.2% to 325.35. .
By Kate Gibson