US stocks slip after GDP report, mixed earnings

Madlen Read and Sara Lepro , The Associated Press , New York Fri, 01/30/2009 10:12 PM Business Stocks turned lower Friday as investors worried that the U.S. economy, though perhaps not as troubled as feared in late 2008, is only getting worse.The Commerce Department said gross domestic product, the widely followed measure of the economy, shrank at a 3.8 percent pace in the final three month of the year. That compared with a 0.5 percent decline in the previous quarter.Friday's reading was much better than the 5.4 percent drop economists expected.Still, the figure could be revised lower in the months ahead - and some analysts believe th economy has been contracting in early 2009 at an even faster pace. Earnings reports have been disappointing, and layoffs have been piling up."GDP is a backward-looking piece of information," said Craig Peckham, market strategist at Jefferies & Co. "It's hard to pinpoint a highly convincing case that e economic and earnings picture will improve."Exxon Mobil Corp. last year surpassed its own record for annual earnings by a U.S. company, but saw a big drop in profit during the fourth quarter. Chevron Corp.'s fourth-quarter results also suffered from the late-2008 plunge in oil prices.And consumer-products company Procter & Gamble Co. said that while fourth-quarter quarter profit jumped 53 percent after selling its Folgers coffee business, sales dipped 3 percent on weakening demand for its products - which include Tide detergent, Olay skin cream and Crest toothpaste.Declining sales are also hitting Honda Motor Co. hard - the Japanese automaker slashed its 2009 profit target by more than half as its earnings dropped 90 percent in the latest quarter.And Japanese electronics maker NEC Corp. said it will cut 20,000 jobs worldwide as it reported a $1.46 billion loss for the fourth quarter.In midmorning trading, the Dow Jones industrial average futures fell 48.91, or 0.60 percent, to 8,100.10. The Standard & Poor's 500 index fell 5.92, or 0.70 percent, to 839.22, and the Nasdaq composite index fell 7.92, or 0.53 percent, to 1,499.92.The Russell 2000 index of smaller companies fell 0.52, or 0.11 percent, to 452.72.On Thursday, the Dow Jones industrial average sank 226 points, while other indicators tumbled more than 3 percent, on news that unemployment claims reached a record high and that new home sales hit a record low. This erased all of the gains from the previous day, when stocks soared on hopes that the government will take bad debt off banks' books.Volatility has been high this week, with the market zigzagging on a mix of earnings and economic news as investors try to determine what the rest of 2009 will bring. Unrelenting concerns about the shaky banking industry have also kept investors from buying with confidence.A bit of good news came from Amazon.com Inc. late Thursday, which reported that its fourth-quarter profit rose 9 percent and easily surpassed analysts' forecasts. The online retailer also provided an optimistic forecast for 2009.Amazon shares rose $8.85, or 17.7 percent, to $58.85.Exxon rose $1.53, or 2 percent, to $78.53.Chevron rose 97 cents to $71.59.Procter & Gamble fell $1.94, or 3.3 percent, to $56.28.Bond prices rose early Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.80 percent from 2.87 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.24 percent from 0.23 percent.