Stocks fell in midday trading as data from the U.S. Department of Commerce showed an economic engine that ran out of gas. The Dow Jones Industrial Average was off 0.32 percent to 18,052 while the S&P 500 dropped 0.4 percent to 2,107 and the Nasdaq dropped 0.5 percent to 5,032.
The Commerce Department said the annualized gross domestic product grew 0.2 percent in the first quarter – well below the 1 percent gain economists expected. IHS Global Insight chief economist Doug Handler said in a research note that “with the volatility in the economy caused by interrupted trade flows and oil market movements, there is room for significant changes in the growth estimates in the revisions over the next couple of months.” Meaning that IHS and other firms may adjust their GDP estimates.
“Still, these revisions won’t provide cause for a rethinking of the economy’s first-quarter performance,” Handler added. “It will remain poor.”
Troubling to economists and analysts was an uptick in inventory growth, which is approaching post-recession highs, Handler said, but quickly said this will likely change in the second quarter.