A sign board displays Toronto Stock Exchange (TSX) stock information in Toronto.Mark Blinch/Reuters
North American stock markets were mostly lower in early trading Friday amid concern over economies in Europe and Russia as data showed slower growth in America.
The Dow Jones industrial average fell 39.69 points to 17,377.16, the S&P 500 edged down 5.87 points to 2,015.38. The Nasdaq composite was the only gainer, up 9.57 points to 4,692.98, as tech stocks held their ground.
Equity futures on the benchmark S&P index were down as much as 1.1 per cent before the release of economic data, as Russia unexpectedly cut interest rates and prices in Europe plunged at a pace last seen in the depths of the recession in 2009.
In Toronto, the S&P/TSX composite index was off 37.30 points to 14,599.98.
The Canadian dollar continued its slide, down 0.9 of a cent to 78.35 cents (U.S), weighed down by low oil prices and the Bank of Canada's interest rate cut on Wednesday. On Thursday, the loonie lost half a cent to close at 79.3 cents (U.S.), close to its lowest level since early April 2009, adding to the three-quarters of a cent drop on Wednesday.
The economy in the U.S. expanded at a slower pace than forecast in the fourth quarter as cooling business investment, a slump in government outlays and a widening trade gap took some of the luster off the biggest gain in consumer spending in almost nine years.
"All this data does is further cloud the entire investment picture," Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. "It confirms that there's going to be continued uncertainty and continued significant volatility."
Gross domestic product grew at a 2.6 per cent annualized rate after a 5 per cent gain in the third quarter that was the fastest since 2003, Commerce Department figures showed Thursday in Washington. The median forecast of 85 economists surveyed by Bloomberg called for a 3 per cent advance. Consumer spending, which accounts for almost 70 per cent of the economy, climbed 4.3 per cent, more than projected.
The U.S. Federal Reserve officials are confronting divergent economic forces as they weigh the timing of the first interest– rate increase since 2006. Surprisingly strong job gains argue for tightening sooner, while inflation held down by a plunge in oil prices and a cooling global economy provides grounds for delay.
"In the background of all of these reports is the Fed," Jim Paulsen, chief investment strategist at Wells Capital Management, said by phone. Paulsen helps manage $351-billion in assets. "It's the big elephant in the room in terms of how fast they might raise rates."
The central bank boosted its assessment of the economy in a statement this week and downplayed low inflation readings, while repeating a pledge to remain "patient" on raising interest rates. It acknowledged global risks, saying it will take into account readings on "international developments" as it decides how long to keep rates low.
"Zero interest rates are not the right interest rates for this economy," James Bullard, president of the Fed Bank of St. Louis, said in a Bloomberg Television interview with Betty Liu and Michael McKee. "Inflation is low, but not low enough to rationalize zero interest rates. There's a lot of underlying momentum in the U.S. economy."
Equity futures fell earlier as Russia's central bank unexpectedly cut its benchmark interest rate by two percentage points, letting the ruble slide as the economy sinks toward recession.
Data showed consumer prices in the euro area fell more than economists forecast in January, underscoring the challenges facing European Central Bank President Mario Draghi. The ECB last week unveiled a 1.14 trillion-euro ($1.3-trillion) quantitative-easing program to combat deflation.
Companies from Procter & Gamble Co. to DuPont Co. and Pfizer Inc. have said the U.S. currency's strength is hurting profits. The strongest dollar in a decade is making American goods and services more expensive overseas, eroding sales.
About 78 per cent of the S&P 500's more than 220 companies that posted earnings this season have beaten analyst estimates, while 56 per cent have topped sales projections, data compiled by Bloomberg show.