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1st LD Writethru: U.S. stocks tumble on disappointing GDP data

Xinhua, January 31, 2015 Adjust font size:

U.S. stocks slumped after a choppy session Friday, with the three major indices notching their biggest monthly losses in a year, as the U.S. government announced the economy grew lower in the final quarter of 2014.

The Dow Jones Industrial Average fell 251.90 points, or 1.45 percent, to 17,164.95. The S&P 500 shed 26.26 points, or 1.30 percent, to 1,994.99. The Nasdaq Composite Index dipped 48.17 points, or 1.03 percent, to 4,635.24.

The U.S. real gross domestic product (GDP) expanded at an annual rate of 2.6 percent in the fourth quarter of 2014, below market expectations, said the Commerce Department Friday.

The economy grew 5 percent in the third quarter and 4.6 percent in the second quarter after contracting in the first three months of the year. In the whole 2014, the economy expanded 2.4 percent, compared with an increase of 2.2 percent in 2013.

The department said the decelerated GDP growth in the fourth quarter mainly reflected an upturn in imports, a downturn in federal government spending and deceleration in nonresidential fixed investment.

However, consumer spending, which accounts for more than two- thirds of U.S. economy activity, increased at a 4.3 percent pace in the fourth quarter, compared with 3.2 percent in the third quarter 2014.

"Households are benefiting from cheaper oil and a stronger dollar already, but as we expected, the negative impact on companies, both on exports and investment, depressed GDP in the fourth quarter and likely will again in the first quarter of 2015. GDP should reaccelerate after that, but weakness early in the year could keep the Federal Reserve liftoff at bay until the third quarter of 2015," said Chris Low, chief economist at FTN Financial, in a note.

U.S. oil price witnessed its biggest daily gains since June 2012, with light, sweet crude for March delivery soaring 8.33 percent, as signs showed that low crude prices slowed U.S. oil companies' drilling activities.

In corporate news, Google shares rose 4.67 percent to 534.52 U. S. dollars apiece Friday after the tech giant reported its fourth- quarter revenue increased 15 percent to 18.10 billion dollars from a year ago.

Amazon shares surged 13.71 percent to 354.53 dollars apiece after the U.S. e-commerce giant posted a better-than-expected profit of the fourth quarter.

Shares of Alibaba decreased 0.81 percent to 89.08 dollars apiece Friday after the previous day's plunge on worse-than- expected quarterly earnings.

Latest data from Thomson Reuters showed that S&P 500 companies' per-share earnings in the fourth quarter are expected to grow 5.3 percent year on year, while revenue growth is forecast to increase 1.6 percent.

For the week, Wall Street registered the fourth weekly drop out of past five, with the blue-chip Dow falling 2.9 percent, and the broader S&P 500 dipping 2.8 percent while the tech-heavy Nasdaq down 2.6 percent. Endite