US stocks ended Thursday down, with the Dow Jones Industrial below 18,000 after US GDP data disappointed and the Bank of Japan decided not to inject further stimulus into its own economy.
With data that may help explain why the Federal Reserve was so ambivalent on Wednesday when it left policy rates on hold, the US economy grew at its slowest pace in two years during the first quarter.
The broad-based S&P 500 index only briefly managed to break into positive territory and ended as it had begun, lower. The ticker was down 0.9% at 2,075.
Meanwhile, the S&P Midcap 400 underperformed, and was down 1.3% at 1,469. However, the two top gainers among midcaps were DreamWorks Animation (NASDAQ:DWA) on takeover plans by Comcast (NASDAQ:CMCSA) and FTI Consulting (NYSE:FCN) after the public relations agency reported Street-beating first quarter earnings. DreamWorks shares ended up 24.1% at $39.96, while FTI, the second-biggest S&P Midcap 400 riser, was up 15.4% - also at $39.96.
The S&P Smallcap 600 was down 1.5% at 697, and led by Proto Labs (NYSE:PRLB), down 21.7% at $63.64.
Even firmer oil prices could not save the bourses from a negative close. The US benchmark West Texas Intermediate was up 0.8% at $45.71.
Midsession
Wall Street shares were lower at midsession on Thursday after the Bank of Japan held back from injecting further stimulus into the world's third-biggest economy, while the top economy, the United States, delivered poor GDP numbers.
The BOJ's move to hold steady in the face of soft global demand and a sharp rise in the yen was particularly jarring for markets after earlier media reports said the bank intended to cut interest rates deeper into negative territory.
The broad-based S&P500 was down 0.03% at 2,094, while the smaller-cap tickers endured worse. The S&P Midcap 400 was down 0.3% at 1,484, and led down by IPG Photonics (NASDAQ:IPGP) after earnings missed targets.
The S&P Smallcap 600 was down 0.3% to 706 and led lower by Proto Labs Inc (NYSE:PRLB), down 20% at $65.15 after reporting target-missing first-quarter earnings. The numbers were impacted by weak commodity prices, unfavourable foreign currency movements, struggling Chinese economy and political unrest in some emerging nations continue to act as prime headwinds.
Proto Labs was also the fourth biggest faller in the broader small-cap Russell 2000, which itself dropped by 0.07% to 1,153.
Oil prices helped support market, with the US benchmark West Texas Intermediate up 0.8% at $45.69, after a week of steady gains for the energy resource, but it was not enough to overcome the upset from Tokyo.
Open
Markets opened lower, but not as weakly as feared, even after – or possibly because of - lacklustre gross domestic product (GDP) data.
“Despite the Fed’s best efforts to leave the door open for a hike at the next meeting, today’s GDP data risks blowing it firmly shut. The data, showing a rise of just 0.5% in the first quarter versus expectations of a rise of 0.7%, undermines the more hawkish Fed tone from last night and does little to justify an imminent raise,” suggested Tom Floyd, senior sales trader at Foenix Partners.
Singing a similar tune was David Lamb, head of dealing at FEXCO Corporate Payments.
“With US GDP growing at its slowest pace for two years and the Fed’s preferred measure of inflation expected to dip tomorrow, America’s rate setters simply have no reason to hike rates any further,” suggested Lamb.
“While the prospect of a June interest rate hike theoretically remains a possibility, the odds of it happening are lengthening by the day,” he added.
That may have been bad news for forex traders long of the dollar, but the Fed's apparent reticence to hike rates too soon was some comfort for equity bulls.
The S&P 500, expected to suffer a double-digit fall, was down just a couple of points at 2,093 after 45 minutes of trading.
The mid-cap S&P 400 fared a bit worse, down 5 at 1,483, while the small-cap measure, the Russell 2,000, weakened two points to 1,152.
Markets may have been mixed overall, but there was still a slew of hot stocks to pick up on, none hotter than Dehaier Medical Systems Ltd (NASDAQ:DHRM), which was up 83% at $2.4383 after it received a $20mln strategic investment from Shenzhen-listed Hangzhou Liaison Interactive Information Technology.
Paragon Shipping Inc (NASDAQ:PRGN) was buoyed by news of new building contracts for dry bulk carriers.
The shares rose 22 cents to 48 cents.