Stocks Dip as Improved Labor Data Fails to Fuel Market

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NEW YORK ( TheStreet) -- Major U.S. stock markets dipped Thursday after a disappointing GDP result, though initial weekly jobless claims continued to fall.  Citigroup shares plunged.

  • The S&P 500 slipped 0.19% to 1,849.04, while the Dow Jones Industrial Average  closed off 0.03% to 16,264.36. The Nasdaq was 0.54% lower at 4,151.23.
  • "It's the end of the quarter: I think that earnings are going to be very sloppy," Matt McGeary, portfolio manager at Eagle Asset Management, said in a phone interview. The firm has $31 billion in assets under management. "I know all everyone talks about is the weather, but it's legitimate this quarter." 
  • The fourth-quarter GDP estimate came in at a modest upward-revision of 2.6% compared with expectations of 2.7%. U.S. initial jobless claims fell 10,000 to 311,000 in the week ended March 22 vs. expectations of 325,000. The four-week moving average also dropped, down 9,500.
  • "GDP growth was ... soft by historical standards ... but sufficient to reduce the modest remaining output gap," Barclays economist Peter Newland said in a report. "Q1 looks likely to be affected by bad weather, with a dent to final sales growth partly offset by continued inventory building," he added.
  • Citigroup dropped 4.5% after its capital plan was rejected by the Federal Reserve due to insufficient progress in risk-management. Other banks which had plans rejected included the U.S. arms of HSBC , Royal Bank of Scotland , Santander , and Zions Bancorp .
  • Other laggards Thursday include Accenture  and GameStop . Accenture gave up 5% after its fiscal second-quarter earnings of $1.03 a share missed expectations by a penny as revenue declined year-over-year amid weakness in its consulting business. GameStop dived 4% after posting a miss on fourth-quarter earnings on limited new title releases and a decrease in store traffic. The company also said that it expects to reduce its video game store count by about 2% this year.
  • Baxter International was a top gainer in the S&P 500, up 3.9% after announcing plans to create two separate, independent global health care companies -- one focused on developing and marketing innovative biopharmaceuticals and the other on life-saving medical products.
  • IBM and Cisco  were top laggards in the Dow, down 1.5% and 1.3%, respectively. 
  • International markets were mixed amid speculation over sanctions for Russia. Germany's DAX closed up 0.03% while the FTSE in London was off 0.26% despite national retail sales growing at a stronger-than-expected 1.7% on the month in February and 3.7% over the year. In Asia, the Hang Seng closed down 0.24% while the Nikkei gained 1.01%.
  • The International Monetary Fund agreed to provide between $14 billion to $18 billion to Ukraine in an economic reform program. Contributions from other donors could see aid reach $27 billion over the coming two years. But Ukraine must meet requirements before approval of the package, such as reforming its energy sector and putting more controls around its exchange rate. President Obama has warned of further sanctions for Russia even if it does not make further moves into Ukraine.

-- By Andrea Tse, Jane Searle and Joe Deaux in New York