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Stocks close with losses on weak economic data

A Wall Street street sign near the New

A Wall Street street sign near the New York Stock Exchange in Manhattan on Aug. 9, 2011. Photo Credit: AP / Mark Lennihan

Stocks declined Wednesday after the economy barely grew in the first quarter and investors weighed the timing for a possible interest-rate increase as the Federal Reserve said part of the weakness was transitory.

At the close on Wall Street, The Dow Jones industrial average was down 74.6 points, about 0.4 percent, at 18,035.5. The Standard & Poor's 500 index lost 7.9 points, about 0.4 percent, to nearly 2,107. The Nasdaq composite gave up nearly 31.8 points, about 0.6 percent, to 5,023.6.

As the markets closed, the U.S. benchmark crude oil price had gained $1.43 to $58.49 a barrel on the New York Mercantile Exchange.

The Federal Reserve Open Market Committee ended its two-day meeting Wednesday afternoon and signaled that it had downgraded its view of the U.S. economy. The Fed policymakers offered no sign that a rate increase might be coming soon.

On a day when a U.S. Commerce Department report indicated that the economy barely grew in the January-March quarter, the Fed acknowledged that economic barometers have weakened of late, in part because of temporary factors. It noted in a statement that growth has slowed, business investment has softened and exports have declined.

It also reiterated that before raising rates, it needs to be "reasonably confident" that low inflation will move back up to the Fed's 2 percent target.

"It confirms people's view that the Fed won't raise interest rates in June -- that's certainly driven home today by GDP growth," said Kristina Hooper, at Allianz Global Investors in Manhattan. The firm oversees $499 billion. "But there is still some question mark because the Fed is blaming part of downturn in the first quarter on transitory factors."

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