Stocks Slip as Economy Shrinks
NEW YORK ( TheStreet) -- Major U.S. stock averages dipped Wednesday after the government said the economy contracted in the fourth quarter. Benchmark indices had touched multi-year highs.
The Dow Jones Industrial Average dropped 22 points, or 0.2%, to 13,933. The blue-chip index has booked gains in seven of the past nine sessions.
Boeing shares gained 1.3% after the aerospace giant beat fourth-quarter earnings estimates and said it sees "no significant financial impact" from the ongoing grounding and regulatory review of its showcase 787 jet.
Most major sectors were off in the broader market, led lower by transportation, energy, capital goods and basic materials. The health-care and consumer non-cyclical sectors were the only gainers.
Volumes totaled 3.7 billion shares on the New York Stock Exchange and 2 billion shares on the Nasdaq. Decliners outpaced advancers by a ratio of 1.9-to-1 on the Big Board and 2.3-to-1 on the Nasdaq.
JJ Kinahan, chief derivatives strategist at TD Ameritrade, said many market observers were surprised at the rally at the market open because the headline gross domestic product number was so disappointing.
"I think there was just a little short squeeze there for a moment or two," he said. On the other hand, the market was also under some natural downward pressure, with the S&P 500 trading around 1,500 and the Dow approaching 14,000.
"Psychologically, they are big numbers," said Kinahan. At these levels, there is natural "resistance," which leads to selling pressure as traders start to take some profits and decide whether they want to reinvest money or sit on the sidelines to get a stronger signal on whether the market could break through those levels, Kinahan explained.
The Federal Reserve released its monetary policy announcement on Wednesday to little fanfare.
The central bank left interest rates unchanged at near-historic lows and noted that the economy "paused" in recent months, largely due to weather-related disruptions from Hurricane Sandy.
"The message was tamped down a bit, because although the chairman
Facebook(FB) issued its fourth-quarter earnings after the closing bell on Wednesday as the social-networking company reported earnings of 17 cents a share on $1.59 billion in revenue. Analysts expected Facebook to post profit of 15 cents a share on revenue of $1.51 billion.