US Stocks Edge Lower as Fourth Quarter Economic Growth Disappoints

Stock prices increasing and decreasing in value Credit: Shutterstock photo

US equity benchmarks were mainly trading lower on Friday afternoon hurt by a mixed set of earnings, falling oil prices and a sharp decline in the pace of economic growth that was recorded in the fourth quarter of last year.

Real gross domestic product increased at an annual rate of 1.9% in the final quarter of 2016, data published by the department of commerce on Friday showed. This marked a steep decline from the 3.5% growth rate registered in the third quarter and missed forecasts for a 2.2% annualized growth rate.

The slowdown was attributed to a decrease in exports, an acceleration in imports and a downturn in federal government spending among other factors, according to the department of commerce, which added that these were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment and an upturn in state and local government spending.

Stocks were also undermined by an unexpected 0.4% decline in durable goods orders which missed expectations for a gain of 2.6%. On the upside, consumer confidence across the US was seen to have improved this month; the University of Michigan's closely-watched consumer sentiment index was revised up to 98.5 for January from a previous estimate of 98.1, beating the consensus estimate for a slight upward revision for the month to 98.2.

On the other side of the pond, Eurozone bourses retreated from Thursday's multi-year highs as selling pressure on banking shares drove the pan-European Stoxx 600 index into negative territory. The UK's benchmark index, the FTSE-100, however, settled on Friday with a modest gain, finishing 0.32% higher.

Oil prices were sliding as the greenback gained in value. West Texas Intermediate crude oil, the main US oil benchmark, was 1.8% lower at $52.84 per barrel while Brent crude, the international gauge, was 2.0% lower at $55.12 per barrel at the time of writing. As a dollar-denominated commodity, a higher US currency tends to make oil less affordable to international buyers. The Dollar Index, which tracks the value of the greenback against a basket of foreign currencies, was 0.1% higher at the time of writing.

Among energy ETFs, the United States Oil Fund was down 1.43% to $11.37 with the United States Natural Gas Fund was down 2.13% to $8.29.

The Dow Jones Industrial Average was 0.09% lower, the S&P 500 was down by 0.13% and the Nasdaq was broadly flat at the time of writing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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