30 Jan 2009, 2225 hrs IST, AGENCIES
NEW YORK: US stocks swung lower on Friday, wiping out opening gains as investors digested government data showing the economy shrank less than expected in the 2008 fourth quarter.
The Dow Jones Industrial Average slid 70.33 points (0.86 percent) to 8,078.68 at 1603 GMT and the tech-rich Nasdaq fell 11.56 points (0.77 percent) to 1,496.28. The broad-market Standard & Poor's 500 index retreated 8.02 points (0.95 percent) to 837.12. Wall Street dived Thursday as investors booked profits amid a series of weak data and poor corporate earnings. The Dow slid 2.70 percent and the Nasdaq 3.24 percent. Stocks had opened with modest gains after the Commerce Department reported that gross domestic product (GDP) contracted at a 3.8 percent pace in the 2008 fourth quarter. It was the sharpest quarterly decline since 1982 but far less than the consensus forecast of a 5.5 percent annualized drop. The estimate of fourth-quarter GDP suggests "that the difficult recession the US economy is experiencing may not be as severe as some analysts had been anticipating," said analysts at Charles Schwab & Co. But some analysts pointed to grim data lurking beneath the headline figure. "The headline on this GDP report is not as bad as feared, but the breakdown doesn't provide much encouragement," said Patrick O'Hare at Briefing.com. Sal Guatieri, senior economist at BMO Capital Markets, said the figure was "very much an illusion" created by an unexpected increase in business inventories. He predicted the 2009 first quarter could contract more sharply. Christina Romer, chair of President Barack Obama's Council of Economic Advisors, warned the recession had spread to all sectors of the economy and highlights the need for a quick stimulus plan. "This widespread decline emphasizes that the problems that began in our housing and financial sector have spread to nearly all areas of the economy," Romer said in a statement. "Immediate action to support both the financial sector and overall demand is essential." Among stocks in focus, Exxon Mobil, the Dow's biggest component, rose 1.21 percent to 77.93 dollars. The oil and gas giant posted a 2008 net profit of 45.22 billion dollars, the largest annual profit ever declared by any publicly listed company in the world, despite a 33 percent fourth-quarter profit plunge amid falling oil prices. Exxon rival Chevron climbed 1.13 percent to 71.42 after reporting 2008 net profit up 28 percent from the prior year. Procter & Gamble fell 3.95 percent to 55.92. The consumer products maker announced in-line quarterly earnings but warned of tough conditions ahead. Amazon vaulted 18.20 percent higher to 59.10. The online retailer reported after Thursday's market close fourth-quarter earnings that beat estimates. Bonds fell back. The yield on the 10-year US Treasury bond edged up to 2.819 percent from 2.815 percent Thursday and that on the 30-year bond rose to 3.575 percent from 3.559 percent. Bond yields and prices move in opposite directions.