U.S. stocks ended a turbulent Friday trading session with big losses, as selling on Wall Street accelerated in the final hour.
Investors grappled with downbeat gross domestic product data, less-than-stellar earnings that overshadowed a bounce in crude-oil futures.
A slower-than-expected economic growth number resulted in a flight to quality, with investors flocking into havens such as Treasurys and gold and unloading equities.
Crude oil prices swung higher Friday, settling at $48.24 a barrel, driven by a big drop in U.S. rig counts as producers responded to oversupply. Oil also got a boost as traders ended bets that the price of oil will see a continued slide.
The main indexes ended January with the biggest monthly losses in a year, while also recording a weekly decline, which marked the fourth weekly drop out of past five.
The S&P 500 SPX, -1.30% closed down 26.26 points, or 1.3%, at 1,994.99. The benchmark index fell 2.8% last week and ended the month with a loss of 3.1%. Only the energy sector finished the day with gains, while nine other sectors slumped.
The Dow Jones Industrial Average DJIA, -1.45% dropped 251.90 points, or 1.5%, to 17,164.95. The blue-chip index declined 2.9% over the past week and lost 3.7% over the month.
The Nasdaq Composite COMP, -1.03% ended the day down 48.17 points, or 1%, at 4,635.24. The tech-heavy index lost 2.6% over the week and ended the month 2.1% lower.
Phil Orlando, chief equity strategist at Federated Investors, said that a big miss in the GDP number had sent investors into bonds and out of stocks.
“The headline number was very disappointing, so investors are buying bonds and selling stocks because they think the economy is decelerating. However, this number is likely to be revised upwards,” said Orlando.
Treasurys trimmed their gains, but the yield on the 10-year note, which moves inversely to prices, was still down 6 basis points at 1.7%, after hitting the lowest level since May 2013 earlier.
“Despite what the Fed said in their statement on Wednesday, if such sub-trend growth persists, the Fed will not tighten in June,” Orlando said.
Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management, struck a more optimistic tone about the GDP data.
“[The] consumer spending number was great, which means that lower oil prices are beginning to translate into increased consumption,” Kravetz said.
“Fundamentals have not changed much and we believe they are still good, while valuations are at the higher side of fairly valued. We think markets will be higher a year from now,” he added.
GDP and employment costs: The U.S. economy slowed a bit more than expected in the fourth quarter after expanding at the fastest pace in 11 years during the fall, according to data released Friday.
Gross domestic product — the value of all goods and services produced by the U.S. — grew at a 2.6% annual clip in the fourth quarter, the government said Friday. That’s below the 5.0% pace recorded in the July-September period.
An index that measures the price of U.S. labor moderated in the fourth quarter. The employment cost index climbed 0.6% in the fourth quarter after a 0.7% increase in both the second and the third quarters. The gain was in line with Wall Street expectations.
Before the report, economists said a 0.6% increase in the ECI would not move the Federal Reserve closer to liftoff. Over the past 12 months, employment costs have risen 2.2%, the same rate as the third quarter.
Chicago PMI rose in January, helped by growth in new orders and the best reading on employment in 14 months.
Friday’s Earnings: Amazon.com Inc. AMZN, +13.71% surged 14% after saying late Thursday it earned 45 cents a share in the fourth quarter, significantly outdistancing the FactSet consensus estimate of 19 cents a share
Xerox Corp. XRX, -2.88% fell 2.9% after reporting a 49% decline in first-quarter earnings and cutting its outlook.
Visa Inc. V, +2.79% climbed 2.8% after credit-card company reported fiscal first-quarter earnings of $2.53 a share after the closing bell on Thursday, ahead of the $2.49 a share forecast by analysts. Its rival MasterCard Inc. MA, +0.80% also gained 0.8% as the company reported a rise in fourth-quarter revenue that was better than expected.
Chevron Corp. CVX, -0.46% slipped 0.5% after the company reported stronger-than-expected fourth-quarter earnings and said it was suspending share repurchases for 2015
Google Inc. GOOG, +4.67% jumped 4.7% after the tech giant late Thursday reported a rise in revenue and profit, although both missed analyst expectations.
Biogen Idec Inc. BIIB, +10.17% rose 10% after the biotech company said late Thursday its fourth-quarter profit nearly doubled, as its portfolio of multiple sclerosis treatments drove a 34% growth in revenue.
Intercept Pharmaceuticals Inc. ICPT, +17.77% soared 18% after the drug maker said late Thursday its investigational treatment for a liver disease was granted breakthrough-therapy status.
Shake Shack Inc. SHAK, +118.57% shares more than doubled on debut, rising 119% to $45.90, having priced its initial public offering at $21 a share on Thursday.
Other markets: European markets were mixed after consumer-price data for January showed the eurozone slipped deeper into negative inflation.
In Asia, Japanese stocks rose, while Shanghai stocks fell for a fourth day.
And in Russia, the ruble slid against the dollar after the country’s central bank cut interest rates to 15% from 17%. The dollar USDRUB, +0.88% bought 70.721 rubles, up from 68.902 on Thursday. The dollar traded mixed against other major currencies.
Gold prices GCH5, +2.26% rose 2% to 1$1,285.20, recovering some of the steep losses from the previous session. Crude prices rebounded sharply, with Nymex futures CLH5, +7.46% rising more than 8%.