Disappointing growth in the nation’s economy pushed stocks lower Friday even as investors welcomed a megamerger between Procter & Gamble Co. and Gillette Co.
Despite the losses, the major indexes eked out the first winning week of 2005.
While investors were cheered by P&G’s bid for Gillette and strong profits from Microsoft Corp., surprisingly weak economic data robbed the markets of any buying momentum. The Commerce Department said gross domestic product rose at an annual rate of 3.1 percent in the fourth quarter, the lowest gain in seven quarters. Economists expected a 3.5 percent rise.
“The thought is that the GDP was a disappointment, but I don’t know anybody really cares about GDP,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland.
“This market has been in a very strong bearish trend for the entire year, such as it is. It’s like people walk in every day to find a reason to justify that trend because they’re afraid.”
The Dow Jones industrial average fell 40.20 points, to 10,427.20.
Broader stock indicators also gave ground. The Standard & Poor’s 500 index was down 3.19 , at 1171.36, and the Nasdaq composite index lost 11.32, to 2035.83.
Nonetheless, the major indexes were positive for the week–barely. The Dow rose 0.33 percent, the S&P 500 was up 0.3 percent and the Nasdaq climbed a meager 0.08 percent.
Already, investors are looking to next week’s Federal Reserve interest rate announcement on Wednesday. Policymakers are widely expected to raise the benchmark interest rate to 2.5 percent from 2.25 percent.
While there have been concerns about rising prices and inflation, slower economic growth could keep the Fed from a more aggressive rate policy.
“It’s a little bit of a tug of war,” said Andy Brooks, head of trading at T. Rowe Price Group Inc. in Baltimore. “There has not been clarity in terms of the prospects for the economy.”
Meanwhile, the January unemployment report is due out Friday. Analysts expect more jobs to be created than December’s low 157,000.
Microsoft edged 7 cents higher to $26.18 after its earnings, announced late Thursday, surpassed Wall Street’s profit forecasts by 2 cents per share.
Among Illinois stocks, Oakbrook Terrace-based higher education firm DeVry soared more than 13 percent, to $17.50, after it reported eliminating 159 jobs and 100 open positions.
Shares of Clarendon Hills-based MAF Bancorp rose nearly 3 percent, to $42.83, after it said it was increasing its quarterly dividend 10 percent, to 23 cents per share, and had authorized the repurchase of up to 1.2 million shares.
Shares of Orland Park-based Andrew gained 2.5 percent, to $13.32, after two analysts raised its rating to “buy” from “hold.”
