The gross domestic product rose at a 3.2 percent annual pace in the January-March period. Economists forecast GDP would rise 3.4 percent.
While the GDP was up for the third straight quarter, it was down from the fourth quarter’s 5.6 percent, a rate that was inflated by government stimulus spending and companies restocking their depleted inventories. For the economy to show healthy growth, it would have to grow at a faster pace than it did the first three months of the year. Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.
Investors were disappointed by a separate report from Reuters and the University of Michigan that showed consumer sentiment rose to 72.2 in April from 69.5. The reading was down from March’s 73.6. Economists had forecast a reading of 71.
In morning trading, the Dow Jones industrial average fell 27.66, or 0.3 percent, to 11,139.66. The Standard & Poor’s 500 index fell 6.11, or 0.5 percent, to 1,200.67, while the Nasdaq composite index fell 14.31, or 0.6 percent, to 2,497.61.
The Chicago Purchasing Managers Index rose this month, further evidence of a recovery in the manufacturing sector. The index jumped to 63.8 in April, from 58.8 last month. Economists had been expecting the index to rise to 60.
Signs of an improving domestic economy pushed stocks higher the past two days, after fresh concerns about European debt problems sent shares plummeting on Tuesday. The Dow jumped 122 points Thursday, its biggest jump since March 5, after another batch of strong earnings and a Labor Department report that showed initial claims for jobless benefits fell last week.
In the last trading session of April, the Dow is set to post its third straight monthly gain. However, unless the Dow can turn around and rise by at least 37 points Friday, the index would snap a streak of eight straight weekly gains. The Dow hasn’t risen nine straight weeks in 15 years.
- Associated Press