U.S. stocks slide on economic worries AAP News 7:42:020 29/04/2005 (Updates Microsoft price after the bell) By Megan Davies NEW YORK, April 28 (Reuters) - U.S. stocks slid on Thursday, after a report showed the economy grew at its slowest pace in two years during the first quarter, oil nudged higher and earnings from companies, including Exxon Mobil Corp., disappointed Wall Street. The combination of negative news sent the Dow, S&P 500 and Nasdaq down by more than 1 percent and pushed the Nasdaq to its lowest close since October. Exxon, the world's largest public oil company, fell 4 percent and weighed on the Dow after its profit missed analysts' expectations as production declined. Other companies that disappointed included Molson Coors Brewing Co., the world's fifth-largest brewer, and JDS Uniphase Corp., a maker of equipment to build fiber optic networks. The Dow Jones industrial average was down 128.43 points, or 1.26 percent, to end at 10,070.37. The Standard & Poor's 500 Index was down 13.16 points, or 1.14 percent, to close at 1,143.22. The Nasdaq Composite Index was down 26.25 points, or 1.36 percent, at 1,904.18. "The market digested the economic data and wasn't at all pleased that the GDP numbers came in at a lower-than-expected rate," said Gordon Fowler, Jr., chief investment officer at The Glenmede Trust Co. "There's growing concern that this slow patch is going to be longer and deeper than people originally thought." In economic news, a government report showed that gross domestic product, which measures total output of goods and services within U.S. borders, grew in the first quarter at an annual rate of 3.1 percent -- lower than expected -- as consumers and businesses were pinched by rising energy prices. The forecast called for growth of 3.6 percent, according to economists polled by Reuters.. The GDP report also showed a pickup in prices, which analysts predict means another quarter-percentage-point hike in interest rates when Federal Reserve policy-makers meet on Tuesday. Cyclical stocks such as manufacturers, which are particularly sensitive to swings in the economy, fell. Caterpillar Inc. slid $1.35 to $86.70, while United Technologies Corp. fell $1.74 to $99.84. OIL PRICES RISE AND BONDS RALLY A late rebound in oil prices contributed to the market extending its losses at the end of the session. "In many ways, the oil markets have taken on as much of a role in determining where economic growth is going to be as much as the Fed does," Fowler said. "For the interim, there's going to be a very strong relationship between the oil price and where the markets go." NYMEX June crude futures rose 16 cents to settle at $51.77 a barrel -- retracing from an earlier slide below $50. High oil prices worry Wall Street because they can hurt consumer spending and corporate profits. Some traders pointed to a flight away from equities and into bonds -- seen as a safe haven during troubled times in the economy. U.S. bonds extended their earlier gains as the stock market slid. The 10-year note yield, which moves inversely to its price, fell to a nine-week low of 4.15 percent. "We've been seeing this for three weeks now," said Peter Boockvar, equity strategist at Miller Tabak & Co. "The bond market is rallying over concerns about the economy, and that's why stocks have sold off. It's the theme of slowing economy, slowing earnings, that's why people are buying bonds." MICROSOFT INCHES UP AFTER HOURS After the closing bell, Microsoft Corp. nudged higher as the software maker reported higher quarterly earnings and forecast revenue for the current quarter that is higher than the average Wall Street estimate. In after-hours trading, Microsoft's shares were up 18 cents at $24.63 after closing the regular Nasdaq session at $24.45. "On an apples-to-apples basis, the earnings number for this quarter looks to be in line and it looks like the revenue was a little light," said Jordan Posner, senior portfolio manager at Matrix Asset Advisors. "The guidance that they put out for next quarter and for fiscal 2006 look to be in line or somewhat better than where estimates have been. It looks to be a good quarter and constructive on the outlook." Among companies falling during regular trading, Molson Coors sank 18.5 percent, or $14.30 to $63 on the New York Stock Exchange, after it reported a first-quarter loss, citing lower sales in key markets and merger-related charges. Exxon Mobil fell $2.38 to $56. Among stocks moving, JDS Uniphase, a maker of equipment to build fiber optic networks, fell 9.7 percent, or 16 cents to $1.49 after its quarterly loss widened as the company consolidates manufacturing and trims jobs. Nextel Communications Inc., the fifth-biggest U.S. mobile phone provider, fell 1.6 percent, or 46 cents to $28.53, weighing on the Nasdaq, after it said first-quarter profit was nearly flat. Contract electronics manufacturer Sanmina-SCI Corp. tumbled 16 percent, or 71 cents to $3.79 on Nasdaq a day after it posted a large quarterly loss as it wrote off goodwill. Among gainers, Starbucks Corp. rose 4.6 percent, or $2.15 to $48.56 a day after it reported a 27 percent increase in quarterly earnings and raised its profit forecast. Goldman Sachs on Thursday raised its investment rating on Starbucks to "outperform" from "in-line." Procter & Gamble Co. nudged up 46 cents to $53.99 and was the Dow's second-biggest percentage gainer. P&G, the maker of Crest toothpaste and Pampers diapers, said earlier in the day that quarterly profit jumped 13 percent, beating estimates, and raised its fiscal year forecast. Trading was active, with 1.75 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.93 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year. Decliners outnumbered advancers on the New York Stock Exchange by about 11 to 5 and by about 11 to 4 on Nasdaq. (Additional reporting by Anna Driver)
