By STEVE ROTHWELL, Associated Press
NEW YORK (AP) — Stock prices were mostly lower in early trading Friday after several companies including Amazon.com released weak earnings and the government reported that the U.S. economy expanded at a slower rate than economists were expecting.
The economy grew at an annual rate of 2.5 percent in the first three months of the year, the Commerce Department said. Much of the gain came from a jump in consumer spending. While that marked a healthy rebounded from the anemic 0.4 percent growth rate in the October-December quarter, growth still lagged the 3.1 percent rate forecast by economists polled by FactSet, a financial data provider.
While the report is backward-looking, it strengthens the perception that the economy is grinding, rather than charging, ahead. Stocks started the year with a surge that pushed both the Dow Jones industrial average and the Standard & Poor's 500 index to record highs. The gains though have slowed in April on signs that the economy is beginning to flag.
Corporate earnings are also driving stock trading this week.
Among the big names that investors were focusing on Friday, Amazon.com fell 6.2 percent to $257.51 after the company said it may report an operating loss in the second quarter. The online retailer's income fell in the first quarter as it continued to spend heavily on order fulfillment and rights to digital content.
Homebuilder D.R. Horton surged 5.8 percent to $25.95 after saying its income nearly tripled thanks to a continuing recovery the housing market. The results were well ahead of the forecasts of financial analysts who follow the company.
Of the companies that have reported earnings so far, 69 percent have exceeded Wall Street's expectations, compared to a 10-year average of 62 percent, according to S&P Capital IQ. However, many have missed analysts' revenue estimates. That's a warning sign to investors that some of the improvement in earnings is coming from cost-cutting instead of increased sales.
The Dow was up 12 points, or 0.1 percent, at 14,711 as of 10:27 a.m. It was moving between small gains and losses in the first hour of trading.
The S&P 500 index fell three points to 1,581, or 0.3 percent. The Nasdaq composite was down 14 points at 3,275, a decline of 0.4 percent.
Among other stocks making big moves, J.C. Penney jumped 6.7 percent to $16.26 after the billionaire financier George Soros disclosed that he had taken a 7.9 percent stake in the company. Earlier this month the struggling department store chain fired its CEO, Ron Johnson, after 17 months on the job and rehired his predecessor Mike Ullman. An ambitious turnaround plan by Johnson had backfired and caused sales to plummet.
In government bond trading, the yield on the 10-year Treasury note fell to 1.68 percent from 1.71 percent, matching its lowest rate of the year.
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