NEW YORK — U.S. stocks slipped on Friday as data showed the U.S. economy grew less than expected in the fourth quarter, while lackluster earnings added pressure to the market, putting the Dow and S&P 500 on pace to end the week on a down note.
The Commerce Department said U.S. gross domestic product expanded at its fastest pace in 1-1/2 years in the last quarter of 2011 but fell shy of expectations. A strong rebuilding of inventories and weak spending by businesses pointed to slower growth early this year, denting recent optimism about an improving economy.
"Is it the three percent they were looking for? No, but the positive you will take out of it is it clearly moving in the right direction it is getting stronger than the last report," said Ken Polcari, managing director at ICAP Equities in New York.
"Now the question is can you really trust and believe this number because they have two more revisions and after they do some more work it gets revised lower."
Losses were curbed as U.S. Federal Reserve statements this week and economic data kept investors alert for the possibility of another round of monetary stimulus known as quantitative easing, or QE3.
"Out of what the Fed said, you can expect some negative numbers because the Fed obviously saw what the GDP numbers are and they anticipate a slowdown," said Sean Kraus, chief investment officer at CitizensTrust in Pasadena, California.
If the Fed does resort to QE3 to stimulate growth, investors "don't want to be caught flat-footed and be out of risky assets," Kraus said.
Chevron Corp fell 2.5 percent to $104 and was the biggest drag on the Dow after the No. 2 U.S. oil company posted lower earnings, missing Wall Street forecasts. The NYSEArca oil index lost 0.7 percent.
The Dow Jones industrial average dropped 93.09 points, or 0.73 percent, to 12,641.54. The Standard & Poor's 500 Index dropped 5.84 points, or 0.44 percent, to 1,312.59. The Nasdaq Composite Index gained 1.51 points, or 0.05 percent, to 2,806.79.
The declines put the Dow and S&P on track for their first weekly loss in the past four weeks.
Procter & Gamble Co dipped 1.3 percent to $63.98 after it said this year's profit would come in lower than previously expected due to the strong dollar.
Ford Motor Co shares fell 3.5 percent to $12.29 after the carmaker reported a lower-than-expected fourth-quarter profit on higher commodity costs and losses in Europe and Asia.
Network equipment makers Juniper Networks Inc and Riverbed Technologies Inc gave first-quarter outlooks after the close Thursday that were below expectations. Juniper fell 3.5 percent to $21.57 while Riverbed slid 19.5 percent to $24.06.
According to Thomson Reuters data, 58.7 percent of 184 S&P 500 companies reporting earnings through Friday have topped analysts' estimates, below the beat rate of about 70 percent seen at this stage of earnings season in recent quarters.
Utilities were the worst performing among S&P sectors after results from American Electric Power Co Inc and Dominion Resources. American Electric was off 3.1 percent to $40.02, while Dominion fell 2.2 percent to $49.71. The S&P utilities index fell 1.5 percent.
Eastman Chemical Co offered to buy specialty chemical maker Solutia Inc for about $3.38 billion in cash and stock to extend its reach in emerging markets, particularly the Asia-Pacific region. Solutia shares jumped 39.7 percent to $27.25 and Eastman shares gained 4.8 percent to $49.37.
Euro zone finance officials voiced optimism a deal to avert a disorderly Greek default was imminent. Renewed concern about the crisis has troubled markets this week. (Reporting By Chuck Mikolajczak; Editing by Kenneth Barry and Jeffrey Benkoe)
