US stocks fall on shrinking economy, disappointing earnings

January 31st, 2009 - 3:34 am ICT by IANS  

New York, Jan 31 (Xinhua) US stocks fell for a second session Friday morning as US gross domestic product (GDP) fell by the highest rate in 27 years and disappointing earnings added to the uncertainty in the market. The US Commerce Department reported Friday that the GDP, which measures total goods and services output in the country, contracted at a 3.8 percent annual rate, the lowest level since the first quarter of 1982. GDP fell 0.5 percent in the third quarter.

Though the figure is better than the 5.4 percent drop economists had expected, many believe that the economy conditions are deteriorating further in the current quarter and the GDP is likely to fall lower.

A series of mixed earnings reports also weighed on the market.

Procter & Gamble , the world’s largest consumer products maker, posted a 53 percent jump in fourth-quarter profit, but its sales fell 3 percent on slumping demand. P&G was the Dow’s biggest drag, down 3.9 percent at $55.95 a share.

Heavy equipment maker Caterpillar decided to slash another 2,110 jobs on top of the 20,000 headcount cut announced on Monday. Caterpillar fell 3.6 percent at $30.71 a share.

The Dow Jones fell 112.23, or 1.38 percent, to 8036.78. Broader indexes also turned lower.

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