Stocks drop on economy news

NEW YORK (AP) – 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.

“We’re in a period of indecisiveness, where things could stay muddled for a while, without any really compelling case to either drive things back up … or, on the other hand, to send things back into a major pullback,” said Katrina Lamb, head of investment strategy and research at MV Financial, a wealth management firm.

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.

Buffalo Wild Wings slumped $24.35, or 12.8 percent, to $160.25 after the company reported disappointing first-quarter results. The company said its net income and revenue grew. But the price of chicken wings surged and Buffalo Wild Wings’ costs were also boosted by the chain’s expansion.

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, which is eating away at the value of overseas sales for global companies based in the U.S. Most investors remain confident that many of the factors weighing on the economy are transitory, and that growth will accelerate in the second quarter, said Russ Koesterich, chief investment strategist at BlackRock. However, if that scenario doesn’t play out, trading could become more volatile in the second half of the year. “The narrative is that the economy rebounds in the second quarter and earnings rebound with it,” said Russ Koesterich, chief investment strategist at BlackRock. “If it wasn’t all about the weather or temporary factors … then that is where you might get some more volatility this summer.”