NEW YORK - The stock market stalled Friday after the U.S. economy didn’t grow as much as hoped and earnings from a handful of big companies failed to stir investors.
The economy grew at a 2.5 percent annual rate in the first three months of the year, the government said. That was below the 3.1 percent forecast by economists.
The shortfall reinforced the perception that the economy is grinding, rather than charging, ahead. Investors have also been troubled by reports in the last month of weaker hiring, slower manufacturing and a drop in factory orders. Many economists see growth slowing to an annual rate of around 2 percent a year for the rest of the year.
“There are some concerns as we head into the summer,” said JJ Kinahan, chief derivatives strategist for TD Ameritrade. “In the last three weeks, we’ve seen numbers that weren’t exactly what you’d love to see.”
Corporate earnings this week have also contained worrisome signs. Many companies missed revenue forecasts from financial analysts, even as they reported higher quarterly profits. For example, Goodyear Tire slipped 3.3 percent to $12.51 Friday after revenue fell short of analysts’ estimates, hurt by lower global tire sales.
Of the companies that have reported earnings so far, 70 percent have exceeded Wall Street’s expectations, compared with a 10-year average of 62 percent, according to S&P Capital IQ. But 43 percent have missed revenue estimates. Just over half of the companies in the S&P 500 have reported quarterly results.
The S&P 500 index dropped 2.92 points, or 0.2 percent, to close at 1,582.24.
The Dow rose 11.75 points, or 0.1 percent, to 14,712.55. The index got a big lift from Chevron. Profit for the U.S. oil company beat expectations of financial analysts in the first quarter, pushing shares up 1.3 percent to $120.04.
Both indexes were up for the week and remain slightly below their all-time highs reached April 11. The Dow index rose 1.1 percent this week while the S&P gained 1.7 percent.
The market has been bolstered by the Federal Reserve’s easy money policy. The disappointing growth figure for the economy will ensure that the Fed sticks with its stimulus policy, providing support for stocks, said Peter Cardillo, chief market economist at Rockwell Global Capital.
“The economic data that we’ve been getting points to no early exit for the Fed’s stimulus,” Cardillo said.
The Nasdaq composite fell 10.73 points to 3,279.26, a decline of 0.3 percent. The index is 2.3 percent higher this week.
The tech-heavy index has lagged the Dow and the S&P 500 this year, but it led the way higher this week, helped by Microsoft.
The software giant, which makes up 5.3 percent of the Nasdaq, recorded its biggest weekly gain since January of last year - up 6.8 percent.
It reported earnings April 19 that beat Wall Street expectations. The company also began an aggressive push into the computer tablet market.
Apple, the largest stock in the Nasdaq, also had a good week. The stock rose 6.8 percent to $417.20, its best weekly gain since November, despite posting a decline in quarterly profit Tuesday. Apple accounts for 7.6 percent of the Nasdaq composite.
Business, Pages 28 on 04/27/2013