Dow slips despite positive GDP figures
Investors in the United States closed out a positive July by collecting profits today, sending stocks lower despite a respectable reading in the nation’s gross domestic product.
The Dow Jones industrial average fell 64.64, or 0.60%, to 10,640.91.
Broader stock indicators also fell. The Standard & Poor’s 500 index was down 9.54, or 0.77%, at 1,234.18, and the Nasdaq composite lost 13.61, or 0.62%, to 2,184.83.
The major indexes finished the week mixed, ending four consecutive weeks of gains, but had big advances for the month.
The Commerce Department’s latest reading on GDP showed the economy growing at an annualised rate of 3.4%. While economists had expected GDP growth to come in at 3.5%, it was considered a strong showing considering the high energy costs that continue to plague the economy.
The Fed next meets August 9 and is widely expected to raise the nation’s benchmark interest rate by a quarter percentage point to 3.5%.
The prospect of further rate hikes may also have been a factor in profit-taking by investors fearing a further slowdown in the economy.
A string of bullish economic data and strong corporate earnings combined to make July a strong month on Wall Street.
The Dow gained 3.56% for the month, while the S&P rose 3.6% and the Nasdaq surged 6.22%.
The Nasdaq, which enjoyed very positive earnings reports from the technology sector, saw its best month since December 2003.
But while profits remained strong this week and the economic data was generally sound, the rally that kept stocks climbing for all of July appeared to be running out of momentum, and investors opted to start cashing in.
For the week, the Dow fell 0.1%, while the S&P edged 0.04% higher and the Nasdaq gained 0.23%.
The Russell 2000 index of smaller companies was down 3.29, or 0.48%, at 679.75.
