Wall Street dips after GDP growth cut

 

NEW YORK: US stocks drifted lower Tuesday after the government revised down economic growth in the third quarter and a new survey showed lackluster consumer confidence.

The Dow Jones Industrial Average shed 17.24 points (0.16 per cent) to 10,433.71, moving down from its highest close since October 2008.

The tech-heavy Nasdaq dipped 6.83 points (0.31 per cent) to 2,169.18 and the broad-market Standard & Poor’s 500 index lost a fractional 0.59 points (0.05 per cent) to 1,105.65.

Stocks declined from the opening bell as the market digested fresh government data showing gross domestic product (GDP) in the July-September period expanded 2.8 per cent, down from the initial estimate of 3.5 per cent.

But shares regained part of the losses after the Federal Reserve raised its outlook for US economic growth in 2010 to a range of 2.5 to 3.5 per cent, and said the troubles in unemployment appeared to be near a peak.

Although the United States economy expanded for the first time in the third quarter after a year of contraction, analysts said the government’s revised figure exposed weakeness in the world’s largest economy.

“The disappointment in the revision is that it shows the US economy, while growing, is still growing below its potential, which is not a positive consideration as far as prospective job growth is concerned,” said Briefing.com’s analyst Patrick O’Hare.

Analysts at Charles Schwab & Co cited personal consumption in the data, which was smaller than initially reported and “short of expectations.

They also said that inflation readings came in below forecasts which might have dampened some hopes that the Federal Reserve was close to beginning to tighten its monetary policy to stave off an overheating of the economy.

Separately, the Conference Board, a key research firm, said that US consumer confidence rose slightly in November after two months of declines but remained mired in the doldrums. -- AFP