U.S. stocks fall following a downward revision of third-quarter U.S. economic growth and mixed corporate earnings data.
NEW YORK (TheStreet) -- U.S. stocks were falling following a disappointing revision of third-quarter U.S. economic growth and mixed corporate earnings data.
The Dow Jones Industrial Average was down 23.6 points at 11,523. The S&P 500 was shedding 1.4 points at 1191, and the tech-heavy Nasdaq was falling 2 points at 2521.
The Bureau of Economic Analysis said its second estimate of U.S. third-quarter gross domestic product growth came in at 2%, down from the prior estimate of 2.5% growth. A poll of economists by Reuters expected a 2.5% annualized growth rate.
"The shortcut to understanding the downward revision is that consumption was slightly weaker than initially estimated, while investment patterns acted as a drag to the economy," Miller Tabak chief economic strategist Andrew Wilkinson said in a note. "The big drag apparent in the revision is from a weakening in inventories as companies pared investment in the face of slacker external demand. The desire to remain lean and nimble came at a time when exporters faced the growing probability of weakening external demand in the shape of the sovereign debt crisis."
Ratings agencies Standard & Poor's and Moody's reaffirmed their views on U.S. creditworthiness despite the failure of the congressional super committee to reach a debt reduction deal.
S&P maintains its AA+ rating for U.S. long-term debt with negative outlook, after downgrading the country from the pristine AAA rating on Aug. 5, and Moody's said its AAA rating with a negative outlook remains unchanged. Fitch Ratings will finalize its U.S. credit rating review by the end of this month.
This, despite the failure of a special congressional committee to reach an agreement to reduce the U.S. deficit by $1.2 trillion over a decade. This will likely trigger automatic spending cuts beginning in 2013 split evenly between defense and domestic spending.
In describing Washington and the deficit, T. Rowe Price chairman and chief investment officer Brian Rogers says "there's a lack of foresight, there's a lack of responsibility ... and also a lack of courage."
Stocks closed down sharply on Monday as political gridlock on U.S. deficit cuts raised a new set of concerns for Wall Street.
Minutes of the Federal Open Market Committee's meeting on Nov. 2 on the benchmark interest rate will be released at 2 p.m. The markets will parse the minutes for signs of discussions on more quantitative easing.
The Dow's biggest decliners were Hewlett-Packard(:HPQ), Boeing(:BA) and United Technologies(:UTX). Bank of America(:BAC), Procter & Gamble(:PG) and Chevron(:CVX) were leading gains.
Trading volume was light ahead of the Thanksgiving holiday weekend. About 529 million shares changed hands on the New York Stock Exchange and about 295 million on the Nasdaq.
In corporate news, Campbell Soup's(:CPB) first-quarter sales fell 1% to $2.16 billion because of a decrease in promotional spending and a drop in volume. Campbell Soup's first-quarter earnings fell to $265 million from $279 million a year ago. The company's per-share earnings of 82 cents a share topped analysts' estimates of 79 cents. Shares were tumbling 3.1%.
Hewlett-Packard, the computer and printer maker, said adjusted earnings per share fell 12% from last year to $1.17 per share. Adjusted net revenue for the quarter ended in October dropped 3% to $32.30 billion. Analysts were expecting profit of $1.13 a share on sales of $32 billion. Shares were surrendering 4.1%.
Hormel Foods(:HRL) said fiscal fourth-quarter profit fell 3%.The maker of Spam said net income fell to $117.3 million, or 43 cents a share, from $121.1 million, or 45 cents, last year. Analysts were expecting a profit of 42 cents a share. Shares were rising 1.5%.
Networking equipment company Brocade Communications(:BRCD) blew past Wall Street's expectations in its fiscal fourth quarter, reporting adjusted earnings of $79 million, or 16 cents a share. Revenue was $550 million, up 9% on a sequential basis but virtually flat from last year. Analysts were calling for a profit of 10 cents a share in the latest quarter on revenue of $527.4 million. Shares were gaining 7.8%.
Online movie rental company Netflix(:NFLX) says it's raising an additional $200 million in capital through the sale of zero coupon convertible notes. Technology Crossover Ventures will be buying the notes, and has the right to nominate one person Netflix's board. Shares were falling 3.3%.
London's FTSE was up 0.14%, and Germany's DAX was falling 0.62%. Overnight, Asian stocks closed mixed. Japan's Nikkei Average was down 0.40%, and Hong Kong's Hang Seng was up 0.14%.
The December gold contract was up $19.50 to $1,698.10 an ounce. January crude oil futures were rising $1.37 to $98.29 a barrel.
The U.S. dollar was falling against a basket of currencies, with the U.S. dollar index down 0.2%. The ten-year Treasury was down 5/32, raising the yield to 1.971%.
-- Written by Andrea Tse in New York.
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