Wall Street closed Friday's session with modest losses following a disappointing report on U.S. gross domestic product. But stocks managed a small advance for the month of January.
The 4 percent annual growth rate in the fourth-quarter GDP report showed an expanding economy, but the number was lower than the 4.8 percent analysts expected. The figure was a slowdown from the third quarter’s 8.2 percent, but no one had expected that rate of growth to be sustained.
“I think the 4 percent GDP number is a terrific performance,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “There’s still a lot of upside to this market, but there’s a fair amount of short-term investment money that’s pulling momentum to the sell side.”
The Dow Jones industrial average was down 22.22 points, or 0.2 percent, at 10,488.07 by the close of trading. It was the second straight week of losses for the Dow, which was down 80.22 points, or 0.8 percent, for the week.
Broader stock indicators also fell Friday, including the Standard & Poor’s 500-stock index, which lost 2.98 points, or 0.3 percent, to close at 1,131.13, finishing the week 10.42 points, or 0.9 percent, lower and snapping a nine-week stretch of gains.
The Nasdaq Composite index, full of tech stocks, was down 2.08 points, or 0.1 percent, at 2,066.15 by the close, losing 57.72 points, or 2.7 percent, on the week, its second straight weekly decline.
January started with a surge in buying throughout the market amid high expectations for the latest round of earnings reports.
But investor enthusiasm dropped when the Federal Reserve changed its stance this week, opening the door for a possible interest rate hike later this year. The resulting sell-off put a big dent in the month’s gains.
For the month, the Dow rose 34.15 points, or 0.3 percent, the Nasdaq Composite rose 62.78 points, or 3.1 percent, and the S&P 500 climbed 19.21 points, or 1.7 percent.
The overall uptick in January — marked by weeks of buying followed by a sell-off this week — is good news to those who believe in the “January barometer.”
The barometer holds that a January rise in the S&P will make for a bullish year, and a lower S&P for January means a bear market is at hand. Since 1950, the barometer has been wrong only five times, with three of those years blamed on world events such as the Vietnam War and the Sept. 11, 2001, attacks.
“Whatever your read is on January, there’s still good news to be had on the economy, especially with the solid corporate earnings we’re seeing” said Brian Bruce, director of global investments for PanAgora Asset Management Inc. “I think it will take a very solid economic report, or a series of positive reports, to assure people that things aren’t as bad as the selling seems to reflect.”
For the short term, the negative reaction to the GDP report pulled down shares that otherwise would be buoyed by positive earnings news. ChevronTexaco Corp. was down 96 cents to $86.35 despite reporting a 91 percent jump in fourth-quarter profits.
Wendy’s International Inc. was up 3 cents to $39.73 after reporting a 28 percent rise in profits, beating analysts’ expectations by 2 cents per share.
Struggling computer maker Gateway Inc. rose 63 cents to $4.72 after it met forecasts by posting an operating loss of 15 cents per share for the fourth quarter late Wednesday. The company also announced it would buy privately held eMachines Inc. for $235 million, creating the nation’s third-largest personal computer maker.
Telephone equipment maker Nortel Networks Corp. posted its first annual profit since 1997, sending shares $1.24 higher to $7.82. The stock was up 46 percent for the month.
General Motors Corp. dropped $1.03 to $49.68 after Goldman Sachs cut its rating on the stock.
The Walt Disney Co. fell 45 cents to $24.00 after a distribution deal between the entertainment giant and Pixar film studios, maker of the popular films “Toy Story” and “Finding Nemo,” was not renewed. Pixar, now free to find other distributors, was up $2.19 to $66.39.
Advancing issues barely outnumbered decliners on the New York Stock Exchange. Volume was light.
The Russell 2000 index of smaller companies closed up 0.90 point, or 0.2 percent, at 580.76.
Overseas, Japan’s Nikkei stock average was flat. Britain’s FTSE 100 closed down 0.5 percent, France’s CAC-40 finished 0.7 percent lower and Germany’s DAX index closed down 0.9 percent.