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 Us Stocks Drop As Economy Grows At Meager Pace

News that the economy skidded to a near halt in the first three months of the year helped push the stock market lower on Wednesday.

Battered by harsh weather, plunging exports and sharp cutbacks in oil and gas drilling, the overall economy grew at a barely discernible annual rate of 0.2 percent in the first quarter, the Commerce Department reported early in the day. It was the poorest showing in a year and down from 2.2 percent growth in the fourth quarter.

Stocks stayed lower after the Federal Reserve downgraded its assessment of the economy and appeared no closer to raising its benchmark interest rate from close to zero.

The stock market, trading close to record levels, is struggling to maintain its upward momentum at the start of the seventh year of a bull-market run. The S&P 500 index has gained only 2.3 percent in the first four months of the year and is fluctuating between small gains and losses. That's a trend that may continue for a while yet.

"We're in a period of indecisiveness, where things could stay muddled for a while, without any really compelling case to either drive things back up ... or, on the other hand, to send things back into a major pullback," said Katrina Lamb, head of investment strategy and research at MV Financial, a wealth management firm.

The Standard & Poor's 500 index fell 7.91 points, or 0.4 percent, to 2,106.85. The Dow Jones industrial average dropped 74.61 points, or 0.4 percent, or 18,035.53 points. The Nasdaq declined 31.78 points, or 0.6 percent, to 5,023.64.

In addition to news from the Fed and on the economy, investors were also looking at the latest corporate earnings.

Starwood Hotels and Resorts surged after the company's board of directors said it would explore a "full range" of strategic and financial options for the company. Starwood also reported earnings that surpassed analysts' expectations. The stock climbed $6.73, or 8.3 percent, to $87.53.

Buffalo Wild Wings slumped $24.35, or 12.8 percent, to $160.25 after the company reported disappointing first-quarter results. The company said its net income and revenue grew. But the price of chicken wings surged and Buffalo Wild Wings' costs were also boosted by the chain's expansion.

Overall, company earnings are coming in better than had been expected.

Just over half of the companies in the S&P 500 have now reported their first-quarter numbers, and analysts are forecasting that average earnings will grow by just 0.2 percent, according to data from S&P Capital IQ. While that is a sharp slowdown from a 7.8 percent growth rate in the fourth quarter of last year, it is much better than the decline of 3.1 percent that analysts had expected at the start of the month.

That slowdown is being driven by a big drop in earnings at energy companies, caused by a plunge in the price of oil, as well as a stronger dollar, which is eating away at the value of overseas sales for global companies based in the U.S. Most investors remain confident that many of the factors weighing on the economy are transitory, and that growth will accelerate in the second quarter, said Russ Koesterich, chief investment strategist at BlackRock. However, if that scenario doesn't play out, trading could become more volatile in the second half of the year. "The narrative is that the economy rebounds in the second quarter and earnings rebound with it," said Russ Koesterich, chief investment strategist at BlackRock. "If it wasn't all about the weather or temporary factors ... then that is where you might get some more volatility this summer."

In other corporate news, shares of Salesforce.com surged as investors reacted to a report that the business software company had been approached by an unidentified suitor.

A Bloomberg story, citing unnamed people, stirred speculation that Salesforce might be sold to rival Oracle Corp. in a deal that could be worth $50 billion. Salesforce jumped $7.76, or 11.6 percent, to $74.65.

In currency trading, the euro climbed to $1.1116 from $1.0972, after the weaker-than-forecast report on the U.S. economy. That's the currency's highest level against the dollar in almost two months. The dollar rose to 118.98 yen from 118.82 yen late Tuesday

Government bond prices fell. The yield on the 10-year Treasury note rose to 2.04 percent from 2 percent late Tuesday.

In energy trading, U.S. benchmark crude oil rose $1.52 to $58.58 a barrel in New York, its highest closing price of the year. Brent crude, the international benchmark for oil, climbed $1.20 to $65.84.

In other energy futures trading on the New York Mercantile Exchange: wholesale gasoline rose 1.6 cents to close at $2.018 a gallon, heating oil rose 3.2 cents to close at $1.948 a gallon and natural gas rose 6.9 cents to close at $2.606 per 1,000 cubic feet.

Precious and industrial metals futures were little changed. Gold fell $3.90 to settle at $1,210 an ounce, silver rose eight cents to $16.67 an ounce and copper rose two cents to $2.80 an ounce.

Copyright 2015 The Associated Press.

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