Stocks fall on Microsoft outlook
Stocks finished mostly lower Friday as rising oil prices and a tepid outlook from Microsoft Corp. dampened Wall Street’s reaction to a rebound in first-quarter economic growth. The major indexes ended mixed for the week and for April.
Coupled with lower-than-expected results for the latest quarter, Microsoft’s reduced forecast sent its stock falling more than 11 percent and led a broader decline in the Nasdaq composite index.
The earnings disappointment overshadowed news that the gross domestic product grew 4.8 percent last quarter, up from a 1.7 percent rise in the fourth quarter. The gain was less than economists’ estimates of 4.9 percent, which suggested the economy is expanding at a comfortable pace.
But while the GDP’s inflation component surged 3.3 percent — well ahead of a 2.7 percent target — the Labor Department said employment costs grew just 0.6 percent last quarter, the smallest rise since 1999 and behind views of 0.9 percent.
Art Hogan, chief market analyst for Jefferies & Co., said the economic data were benign for inflation and the debate over interest rates, and noted a recovery among commodities and energy prices.
“With that as a backdrop, I’m not surprised to see” the Nasdaq down and little changes in the other major indexes, Hogan said. “Of course, when you have a marquee name like Microsoft disappoint, it’s hard to sit up on good news.”
The Dow Jones industrial average dropped 15.37, or 0.14 percent, to 11,367.14.
Broader stock indicators ended mixed. The Standard & Poor’s 500 index added 0.89, or 0.07 percent, to 1,310.61, and the Nasdaq fell 22.38, or 0.95 percent, to 2,322.57.
Bonds climbed on the GDP data, with the yield on the 10-year Treasury note slipping to 5.07 percent from 5.11 percent late Thursday. The dollar was mixed against other major currencies, and gold prices surged.
Crude futures recovered from four days of losses, lifted by supply worries after the International Atomic Energy Agency said Iran defied the U.N. Security Council by enriching uranium. A barrel of light crude rose 91 cents to settle at $71.88 on the New York Mercantile Exchange.
Erratic trading left the major indexes flat for the week, with the Dow gaining 0.17 percent and the S&P 500 off 0.05 percent. The Nasdaq lost 0.87 percent after Friday’s decline gave back most of its advance from earlier in the week.
Advancing issues led decliners by 19 to 13 on the New York Stock Exchange, where preliminary consolidated volume of 2.54 billion shares lagged the 2.92 billion shares that changed hands Thursday.
The Russell 2000 index of smaller companies rose 3.14, or 0.41 percent, to 764.54.
Overseas, Japan’s Nikkei stock average lost 1.22 percent. Britain’s FTSE 100 fell 0.61 percent, Germany’s DAX index slid 0.95 percent and France’s CAC-40 was lower by 0.48 percent.