U.S. Stocks Drop as Economy Grows at Meager Pace 


News that the economy skidded to a near halt in the first three months of the year helped push the stock market lower on Wednesday.

Battered by harsh weather, plunging exports and sharp cutbacks in oil and gas drilling, the overall economy grew at a barely discernible annual rate of 0.2 percent in the first quarter, the Commerce Department reported early in the day. It was the poorest showing in a year and down from 2.2 percent growth in the fourth quarter.

Stocks stayed lower after the Federal Reserve downgraded its assessment of the economy and appeared no closer to raising its benchmark interest rate from close to zero.

The stock market, trading close to record levels, is struggling to maintain its upward momentum at the start of the seventh year of a bull-market run. The S&P 500 index has gained only 2.3 percent in the first four months of the year and is fluctuating between small gains and losses. That’s a trend that may continue for a while yet.

The Standard & Poor’s 500 index fell 7.91 points, or 0.4 percent, to 2,106.85. The Dow Jones industrial average dropped 74.61 points, or 0.4 percent, or 18,035.53 points. The Nasdaq declined 31.78 points, or 0.6 percent, to 5,023.64.

In addition to news from the Fed and on the economy, investors were also looking at the latest corporate earnings.

Starwood Hotels and Resorts surged after the company’s board of directors said it would explore a “full range” of strategic and financial options for the company. Starwood also reported earnings that surpassed analysts’ expectations. The stock climbed $6.73, or 8.3 percent, to $87.53.

Overall, company earnings are coming in better than had been expected.

Just over half of the companies in the S&P 500 have now reported their first-quarter numbers, and analysts are forecasting that average earnings will grow by just 0.2 percent, according to data from S&P Capital IQ. While that is a sharp slowdown from a 7.8 percent growth rate in the fourth quarter of last year, it is much better than the decline of 3.1 percent that analysts had expected at the start of the month.

That slowdown is being driven by a big drop in earnings at energy companies, caused by a plunge in the price of oil, as well as a stronger dollar.

In currency trading, the euro climbed to $1.1116 from $1.0972, after the weaker-than-forecast report on the U.S. economy. That’s the currency’s highest level against the dollar in almost two months. The dollar rose to 118.98 yen from 118.82 yen late Tuesday

Government bond prices fell. The yield on the 10-year Treasury note rose to 2.04 percent from 2 percent late Tuesday.

In energy trading, U.S. benchmark crude oil rose $1.52 to $58.58 a barrel in New York, its highest closing price of the year. Brent crude, the international benchmark for oil, climbed $1.20 to $65.84.

In other energy futures trading on the New York Mercantile Exchange: wholesale gasoline rose 1.6 cents to close at $2.018 a gallon, heating oil rose 3.2 cents to close at $1.948 a gallon and natural gas rose 6.9 cents to close at $2.606 per 1,000 cubic feet.

Precious and industrial metals futures were little changed. Gold fell $3.90 to settle at $1,210 an ounce, silver rose eight cents to $16.67 an ounce and copper rose two cents to $2.80 an ounce.