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Markets fall as GDP slowdown overshadows energy rebound sparked by crude price surge

U.S. stocks fell Friday, sending the Standard & Poor’s 500 Index to its biggest monthly decline in a year, as weaker-than-forecast economic growth overshadowed a rally in energy shares sparked by a surge in the price of crude.

The S&P 500 slid 1.3 percent to 1,994.99, extending its monthly loss to 3.1 percent. The index tumbled 2.8 percent in the week, the most since Dec. 12. The Dow Jones Industrial Average dropped 251.90 points, or 1.5 percent, to 17,164.95. The Russell 2000 Index of small caps tumbled 2.1 percent, the biggest slide since Dec. 10.

More than 8.5 billion shares changed hands on U.S. exchanges, the busiest trading since Dec. 19, and 26 percent above the three-month average.

Energy shares in the S&P 500 gained 0.7 percent as U.S. oil surged 8.3 percent. Amazon.com Inc. and Biogen Idec Inc. soared at least 10 percent after reporting earnings.

Gross domestic product grew at a 2.6 percent annualized rate after a 5 percent gain in the third quarter that was the fastest since 2003, Commerce Department figures showed Thursday in Washington. Consumer spending, which accounts for almost 70 percent of the economy, climbed 4.3 percent, more than projected.

A separate report showed American consumer confidence reached an 11-year high in January as a strengthening labor market and plunging gas prices kept households looking on the bright side.

Federal Reserve officials are confronting divergent economic forces as they weigh the timing of the first interest-rate increase since 2006. Surprisingly strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.

“In the background of all of these reports is the Fed,” Jim Paulsen, chief investment strategist at Wells Capital Management, said by phone. Paulsen helps manage $351 billion in assets. “It’s the big elephant in the room in terms of how fast they might raise rates.”

The central bank boosted its assessment of the economy in a statement this week and downplayed low inflation readings, while repeating a pledge to remain “patient” on raising interest rates. It acknowledged global risks, saying it will take into account readings on “international developments” as it decides how long to keep rates low.

Equity futures fell earlier as Russia’s central bank unexpectedly cut its benchmark interest rate by two percentage points, letting the ruble slide as the economy sinks toward recession.

Data showed consumer prices in the euro area fell more than economists forecast in January, underscoring the challenges facing European Central Bank President Mario Draghi. The ECB last week unveiled a 1.14 trillion-euro ($1.3 trillion) quantitative-easing program to combat deflation.

Companies from Procter & Gamble Co. to DuPont Co. and Pfizer Inc. have said the U.S. currency’s strength is hurting profits. The strongest dollar in a decade is making American goods and services more expensive overseas, eroding sales.

Chevron Corp. fell 0.5 percent after dropping as much as 4 percent. The energy company slashed its drilling budget by the most in 12 years and said it may delay some shale projects as energy producers around the world hoard cash and curtail ambitions in response to free-falling oil prices.

PulteGroup Inc. slid 5.6 percent as Wells Fargo Securities analyst Adam Rudiger downgraded the stock to market perform from outperform.

Microsoft Corp., Intel Corp. and Cisco Systems Inc. retreated more than 3.1 percent to pace losses among the biggest companies. Amazon.com Inc. surged 14 percent, the most since April 2012, after the online retailer posted a fourth-quarter profit following two straight quarters of losses.

Google Inc. jumped 4.7 percent even as fourth-quarter sales and profit missed estimates.

Visa Inc., the world’s largest payments network, climbed 2.8 percent as first-quarter profit beat analysts’ estimates and the company announced a 4-for-1 stock split. Goldman Sachs Group Inc. is poised to replace Visa as the most heavily weighted component of the Dow after the split.

MasterCard Inc. added 0.8 percent after profit beat analysts’ estimates as customer spending climbed.