U.S. stocks fell at midday Friday, with the Standard & Poor’s 500 Index heading for its biggest monthly decline in a year, amid concern over economies in Europe and Russia as data showed slower growth in America.
The S&P 500 slid 0.34 percent to 2,014.36 at 12:19 p.m. in New York. The gauge is down 2.6 percent for the month, the biggest drop since January 2014. The Dow Jones Industrial Average fell 66.79 points, or 0.38 percent, to 17,350.06 as Chevron Corp. led losses after slashing its drilling budget. The Nasdaq 100 Index was little changed as Amazon.com Inc. and Google Inc. surged.
Stocks fell early on Friday as Russia unexpectedly cut interest rates and prices in Europe plunged at a pace last seen in the depths of the recession in 2009. The U.S. economy expanded at a slower pace than forecast in the fourth quarter as cooling business investment, a slump in government outlays and a widening trade gap took some of the luster off the biggest gain in consumer spending in almost nine years.
“All this data does is further cloud the entire investment picture,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “It confirms that there’s going to be continued uncertainty and continued significant volatility.”
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. The median forecast of 85 economists surveyed by Bloomberg called for a 3 percent advance. 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.
“Zero interest rates are not the right interest rates for this economy,” James Bullard, president of the Fed Bank of St. Louis, said in a Bloomberg Television interview. “Inflation is low, but not low enough to rationalize zero interest rates. There’s a lot of underlying momentum in the U.S. economy.”
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.
About 78 percent of the S&P 500’s more than 220 companies that posted earnings this season have beaten analyst estimates, while 56 percent have topped sales projections, data compiled by Bloomberg show.
Chevron Corp. lost 3.2 percent for the biggest drop in the Dow. 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.
Microsoft Corp., Intel Corp. and Cisco Systems Inc. also retreated more than 2 percent to pace losses among the biggest companies.
Amazon.com Inc. surged 12 percent after the online retailer posted a fourth-quarter profit, following two straight quarters of losses.
Google Inc. jumped 4 percent even as fourth-quarter sales and profit missed estimates.
Visa Inc., the world’s largest payments network, climbed 5.1 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 1.1 percent after profit beat analysts’ estimates as customer spending climbed.
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