Stocks Fall as IMF Cuts 2014 U.S. Growth Forecast

Michael Teague  |

Stocks ended the week on a sour note on Friday after the previous day’s rally had given hope to investors heading in to the weekend.

Indices rallied around a percent and a half each on Thursday after better-than-expected economic reports combined with renewed hopes that the Federal Reserve would keep interest rates at their current record lows.

On Friday, however, the international monetary fund cut its forecast for U.S. growth in 2014 down from 3 percent to 2.7 percent, while leaving the 1.9 percent growth forecast for the current year in place. Though the IMF confirmed that the U.S. economy was resting on strengthening fundamentals, the organization also criticized spending cuts and tax increases that have kicked in 2013. Furthermore, it advised the Federal Reserve to be extremely cautious as it begins to draw back its massive stimulus program.

Meanwhile, the preliminary Thomson Reuters/University of Michigan index of consumer sentiment for the month of June came in below the forecasted 84.5 at 82.7, after hitting a six-year high in May.

The S&P 500 closed at 1,626.73 points on a loss of 0.59 percent, while the Dow was down 0.7 percent to 15,070.18. The Nasdaq dropped 0.63 percent to close at 3,423.56 points.

Only five of the Dow’s components ended the day in the positive, with American Express (AXP) and E.I. du Pont de Nemours (DD) leading the way down with losses of over two percent.

On the S&P 500, newspaper publisher Gannett Co. dropped over 6 percent to $25 a day after shares had spiked on the announcement that the industry’s largest conglomerate was purchasing the TV station Belo Corp. (BLC). Otherwise, financial stocks were the highest-volume drag on the index, with Microsoft (MSFT), Micron Technology (MU) and Cisco Systems (CSCO) each dropping around 1 percent.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AXP American Express Company 101.02 -0.16 -0.16 5,220,755 Trade
CSCO Cisco Systems Inc. 44.06 -0.14 -0.32 30,513,804 Trade
MU Micron Technology Inc. 34.11 0.23 0.68 46,135,371 Trade
OSN SMDT Ossen Innovation Co. Ltd. 1.46 -0.06 -3.95 14,117 Trade
MSFT Microsoft Corporation 103.97 1.08 1.05 49,319,196 Trade

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