While you were sleeping: US GDP estimate trimmed; stocks weaken, dollar gains

The US economy grew less than initially estimated in the third quarter on more tepid consumer spending, underpinning concern the world’s biggest economy is managing only a gradual recovery. Stocks weakened and the dollar gained.

Gross domestic product expanded at an annual pace of 2.8%, less than the preliminary estimate of 3.5%, according to the Commerce Department. Consumer spending rose at a 2.9% pace, lower than expected.

Still, the Conference Board’s confidence index edged up to 49.5 this month from 48.7 in October and home prices in 20 US cities rose 0.27% in September from the previous month, seasonally adjusted, according to the S&P/Case-Shiller home-price index. The measure is 9.36% lower than in September 2008.

The Dow Jones Industrial Average fell 0.2% to 10430.69 and the Standard & Poor’s 500 Index slipped 0.1% to 1105.39. The Nasdaq Composite fell 0.5% to 2165.73.

The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street’s `fear gauge,’ fell 5% to 20.66.

JPMorgan Chase slipped 2% to US$42.41, leading the Dow lower and pacing a decline in financials after the Federal Deposit Insurance Corp. said the number of “problem” American lenders climbed to 552 in the third quarter, a 16-year high.

Bank of America declined 0.7% to US$16.17. KeyCorp shed 0.8% to US$5.90 and Fifth Third Bancorp declined 1.4% to US$10.03 after Bloomberg reported that the Federal Reserve asked nine banks to submit plans for repaying bailout funds.

Hewlett-Packard fell 1.5% to US$50.26 after reporting a decline in sales of personal computers.

Freeport-McMoRan Copper & Gold was little changed at US$85.35 and Alcoa slid 1.2% to US$12.90 as prices of metals declined.

Copper fell from a 14-month high as a stronger greenback sapped demand for commodities as an alternative investment and data showed a weaker track of US economic growth.

Copper futures for March delivery slipped 0.8% to US$3.138 a pound on the New York Mercantile Exchange.

Crude oil declined after the GDP report stoked concern demand for fuel will be more subdued. Traders are awaiting US Energy Department figures this week that are expected to show stockpiles of crude climbed last week.

Crude oil for January delivery fell 1.9% to US$76.08 a barrel on the New York Mercantile Exchange.

The dollar and the yen climbed against the euro after the GDP report underlined the slow pace of US recovery.

The euro weakened 0.6% to 132.35 yen and traded at US$1.4961. The dollar slipped to 88.47 yen from 88.97.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.2% to 75.07.

Stocks in Europe fell, with the Dow Jones Stoxx 600 sliding 0.7% to 246.88 as signs of more tepid US economic growth outweighed the impact of a survey showing the strongest German business confidence in 15 months.

Among national benchmark indexes, the UK’s FTSE 100 fell 0.6% to 5323.96, Germany’s DAX declined 0.6% to 5769.31 and France’s CAC 40 dropped 0.8% to 3784.62.

UBS AG slipped 2% after Bank of America Merrill Lynch added the Swiss lender to its “least preferred” list.

German business confidence rose more than expected this month. The Ifo institute’s business climate index rose to 93.9 from 92 in the previous month.

In the UK, British Bankers Association figures showed mortgage approvals rose to the highest since January 2008 in October.

Xstrata Plc fell 1.6% as commodity prices slipped. Vedanta Resources slid 2.7%.

Metro AG, Germany’s largest retailer, fell 1.4% after saying its Real superstores won’t meet profit targets this year.

Businesswire.co.nz

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