Posted on: Thursday, June 9, 2005
Lower growth outlook sends stocks downward
By Meg Richards
Associated Press
NEW YORK — Stocks slumped yesterday as the Bush administration said the economy would likely grow at a slower pace than forecast, an assessment that eclipsed positive corporate news and lower oil prices.
Still, analysts remained optimistic about the market's long-range outlook.
"I think everybody is already accustomed to the fact that the economy is not going to grow at the same fast clip it did a few years ago. This move, which is just a tenth of a point, is not a big surprise for most people, or we would've seen a bigger selloff at the close," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "The other concern was over the comment on inflation with oil prices; to that degree, everybody is trying to keep their finger on the pulse of inflationary news, and what it means for rates down the road."
Crude oil skidded $1.22 to settle at $52.54 per barrel on the New York Mercantile Exchange, reversing gains made after a weekly government report on fuel inventories showed an unexpected 3-million-barrel draw on crude. Gasoline inventories were also down, though supplies of distillate fuels rose.
Declining issues outnumbered advancers by about 3 to 2 on the Big Board. Consolidated volume came to 1.76 billion shares, compared with 1.91 billion traded Tuesday.
The White House expects the economy to continue growing at a 3.4 percent rate, a fraction less than the 3.5 percent pace predicted in December. In addition, rising energy prices prompted the administration to step up its inflation forecast for the year. The report was a further distraction for investors, who were already leaning toward the sidelines ahead of congressional testimony by Federal Reserve Chairman Alan Greenspan.
