National / U.S. News

US stocks slip as economic growth disappoints

 

Trader David O'Day works on the floor of the New York Stock Exchange, Thursday, April 28, 2016. Stocks are opening broadly lower on Wall Street as traders look over the latest batch of earnings and deal news. (AP Photo/Richard Drew)

Trader David O’Day works on the floor of the New York Stock Exchange, Thursday, April 28, 2016. Stocks are opening broadly lower on Wall Street as traders look over the latest batch of earnings and deal news. (AP Photo/Richard Drew)

NEW YORK (AP) — U.S. stocks are slipping Thursday afternoon following reports of slower economic growth in the U.S. and mixed earnings reports. The U.S. government said the economy didn’t grow as much as expected in the first three months of this year. Facebook reached an all-time high after a strong quarterly report, and several companies are moving on deal news.

KEEPING SCORE: The Dow Jones industrial average lost 62 points, or 0.4 percent, to 17,979 as of 1:35 p.m. Eastern time. The Standard & Poor’s 500 index was down less than a point as 2,094. The Nasdaq composite, which has fallen for five days in a row, inched up 3 points to 4,866.

ECONOMY SLOWS: The U.S. economy grew a bit less than expected in the first quarter. The government said gross domestic product increased just 0.5 percent as consumer spending slowed down, exports kept falling, and business investment plunged. That’s the weakest result in two years, but experts think the economy will bounce back in the current quarter.

HANGING UP: Phone and utility companies, which jumped Wednesday, took some of the largest losses. Verizon Communications fell 55 cents, or 1.1 percent, to $51.14.

DEALS, DEALS, DEALS: Most of the day’s big deals were in health care. In the largest, medical device maker Abbott Laboratories said it will buy St. Jude Medical for $19.3 billion, combining Abbott’s heart devices, heart valve products and infant formula business with St. Jude’s heart failure and heart rhythm device products.

The deal valued St. Jude stock at $46.75 per share, and it rocketed $16.94, or 27.3 percent, to $78.89 while Abbott fell $2.56, or 5.8 percent, to $41.27.

French drugmaker Sanofi went public with an offer to buy cancer drug maker Medivation for $9.3 billion, or $52.50 per share. Medivation, the maker of the prostate cancer medication Xtandi, added $4.33, or 8.3 percent, to $56.38. U.S.-traded Sanofi stock slid 46 cents, or 1.1 percent, to $43.16.

Drugmaker AbbVie said it will buy privately-held Stemcentrx for $5.8 billion. Stemcentrx is developing a drug that uses stem cells to treat small cell lung cancer. AbbVie stock rose 49 cents to $61.20.

DREAM COME TRUE: Comcast’s NBCUniversal unit will buy DreamWorks Animation, the movie studio behind the “Kung Fu Panda” and “How to Train Your Dragon” franchises, for $3.55 billion. The deal values DreamWorks at $41 a share, and the stock, which jumped 19 percent Wednesday, rose another $7.77, or 24.1 percent, to $39.97. Comcast gained 21 cents to $61.51.

EXPANDING WAISTLINE: Hanesbrands, a maker of underwear, t-shirts and socks, said it will buy the biggest maker of underwear in Australia. The company said its offer values Pacific Brands Ltd. at $800 million. Hanesbrands has also made a series of deals to give it more control of the Champion brand overseas. The stock jumped $2.31, or 8.3 percent, to $30.10.

TECH RISING: Facebook reached an all-time high after first-quarter profit nearly tripled. Revenue was also better than expected. The stock climbed $8.31, or 7.6 percent, to $117.20. Online payments company PayPal gained 76 cents, or 1.9 percent, to $40.77 after its net income and revenue surpassed estimates.

CONSUMER STOCKS: Consumer companies traded higher. Colgate-Palmolive reported strong results as sales of toothpaste, body washes, cleaners and other products improved. Its sales were better than expected and stock rose $1.84, or 2.7 percent, to $71.16. Cigarette maker Altria posted a larger-than-expected profit and gained 65 cents, or 1.1 percent, to $62.20.

GNC-YA: Nutritional supplement company GNC Holdings plunged after it reported weak first-quarter results, including lower vitamin sales. The company also said it will sell 84 stores to a franchise operator. GNC stock lost $10.55, or 29.6 percent, to $25.05.

NOT IN HARMAN-Y: Harman International, which makes automotive electronics and audio equipment, reported first-quarter results that didn’t meet analyst projections. The company also cut its forecasts for the rest of the year. Harman said revenue from a business that makes equipment for restaurants, sports arenas and other businesses fell. Its stock dropped $10.96, or 12.3 percent, to $77.94.

OVERSEAS: European stock indexes were mixed. Germany’s DAX was 0.2 percent higher while the CAC 40 in France and the FTSE 100 index in Britain were little changed. Asian stocks mostly fell as investors were disappointed by the Bank of Japan’s decision not to add to its huge economic stimulus program. That surprised investors, and the Japanese yen continued to get stronger. The dollar sank to 108.24 yen from 111.34 yen. The Nikkei 225, Japan’s main stock index, tumbled 3.6 percent.

South Korea’s Kospi shed 0.7 percent and Hong Kong’s Hang Seng index eked out a 0.1 percent gain.

ENERGY: Benchmark U.S. crude oil, which is at its highest prices in almost six months, rose 53 cents, or 1.2 percent, to $45.8 a barrel in New York. Brent crude, the international standard, picked up 38 cents to $47.56 a barrel in London.

METALS: The price of gold rose $15.90, or 1.3 percent, to $1,226.30 an ounce. Silver gained 26 cents, or 1.5 percent, to $17.55 an ounce. Copper edged up less than a penny to $2.22 a pound.

BONDS, CURRENCIES: Bond prices were little changed after a big gain on Wednesday. The yield on the 10-year U.S. Treasury note remained at 1.85 percent. The euro rose to $1.1342 from $1.1323.

____

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay

 

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.