Friday, February 01, 2013

Wall Street Retreat on US Economic Contraction in 4th Quarter

Wall Street retreats on US economic contraction in Q4

Xinhua | Agencies
Published on January 31, 2013 08:28

US stocks dipped on Wednesday after the world's largest economy shrunk unexpectedly in the fourth quarter of last year.

Losses of main stock indices accelerated after the Federal Reserve made a statement in the afternoon following a two-day policy-making meeting. The Fed said recent months have seen a pause in economic activity because of temporary forces including bad weather.

The US gross domestic product (GDP) fell unexpectedly in the fourth quarter at a 0.1 percent annual rate, the worst performance since the second quarter of 2009, when the recession ended, the Commerce Department said on Wednesday.

The central bank also added that it anticipated short-term interest rates would remain near zero unless the jobless rate dropped to at least 6.5 percent, which was consistent with market expectations.

The market failed to respond with gains to encouraging jobs data after the opening bell.

The private sector added 192,000 jobs in January, slightly higher than expected, according to the latest report released on the same day by payroll processing firm ADP.

Upbeat earnings reports from notable companies once pushed the equity markets into positive territory in the morning session.

Shares of Amazon moved up 12.40 US dollars apiece, or 4.76 percent, after the world's largest on-line retailer reported after Tuesday's closing bell that the company's revenue jumped 22 percent and margins were strong during the fourth quarter, compared to the year-ago period.

Boeing shares advanced 1.25 percent to 74.57 dollars after the Chicago-based company said its net income in the fourth quarter was 978 million dollars, or 1.28 a share, or 9 cents a share, higher than the average estimates from analysts. The aircraft maker has been confronted with series of problems with the batteries on its new 787 Dreamliner recently.

Shares of Research in Motion plunged 12.01 percent to 13.78 dollars though the company formally introduced its BlackBerry 10 operating system on two new handsets and changed its corporate name to BlackBerry on Wednesday.

Facebook shares still slumped in after-hour trading even though the social networking released a quarterly profit that beat market estimates after the closing bell. The company earned 0.17 dollars per share on a revenue of 1.59 billion dollars in the fourth quarter.

The Dow Jones Industrial Average dipped 44.31 points, or 0.32 percent, to 13,910.11. The Standard & Poor's 500-stock index gave up 5.88 points, or 0.39 percent, to 1,501.96.

The Nasdaq edged down 11.35 points, or 0.36 percent, to 3,142.31.

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