US Stocks Move Sideways Despite Strong Economic Growth
NEW YORK (AP) — A government report showing solid economic growth and a mixed bag of corporate earnings sent U.S. stocks sideways in early trading Friday on Wall Street.
Stocks are on pace to finish the week barely higher after investors weighed contrasting earnings results. U.S. companies are about a third of the way through their latest round of quarterly reports. So far they've avoided analysts' most dire predictions for a severe contraction.
Amazon and Ford led their respective sectors broadly higher as investors applauded solid financial results. But Intel's weak forecast sent shares of chipmakers lower, while Exxon led a decline in energy stocks. Both Intel and Exxon contributed to a slide in the Dow Jones Industrial Average.
The Commerce Department's latest economic growth report is helping to stabilize the broader market. The U.S. economy grew at a 3.2% annual pace in the first quarter. That marks a surge from the previous quarter and it blows away Wall Street forecasts. The report helped push bond prices higher, a sign that investors have more confidence in continued economic growth. The yield on the 10-year Treasury fell to 2.49%.
Earlier this week the benchmark S&P 500 index hit an all-time high, as investors grew more confident in economic growth and corporate earnings. The broad index is up more than 16% for the year.
KEEPING SCORE: The S&P 500 rose 0.5 percent as of 10:10 a.m. The Dow Jones fell 0.1%, or 43 points, to 26,415. The Nasdaq composite fell 0.5%
CHIPPED FORECAST: Intel shares fell 9.5% after the chipmaker warned that weak demand in China will likely continue through the current quarter. It slashed its forecast for the quarter and expects a drop in revenue for the year.
The warning dragged down competitors, who also rely in large part on growth in China to fuel sales. Nvidia fell 5.6%, Micron Technology fell 3.4% and Western Digital fell 5.8%.
TOY STORY: Mattel jumped 7.6% after surprising investors with higher sales of its iconic Barbie and Hot Wheels toys. The company and its competitor Hasbro have been trying to find a new way to drive sales after the bankruptcy of Toys R Us. Both companies have now surprised the broader market with solid sales, despite the disappearance of the major retailer.
By AP reporter Damian J. Troise