FINANCIAL MARKETS
NEW YORK—Stocks sank Friday following news that the U.S. economy shrank in the first three months of the year. The revised data showed that gross domestic product contracted 0.7 percent in the first quarter. That was worse than the government’s initial estimate of growth of 0.2 percent. The Dow Jones industrial average lost 115.44 points, or 0.6 percent, to 18,010.68. The Standard & Poor’s 500 index lost 13.40 points, or 0.6 percent, to 2,107.39 and the Nasdaq composite lost 27.95 points, or 0.6 percent, to 5,070.03. All three indexes ended the week lower. It was the first weekly loss for the S&P 500 following three weeks of gains.
Investors had two other disappointing pieces of economic news to work through. A Chicago manufacturing survey fell to 46.2, well below the 53 that economists were anticipating, and a measure of consumer sentiment fell to a six-month low in May. Along with the disappointing economic data, investors continued to watch developments out of Greece.
Greek Prime Minister Alexis Tsipras has said a deal with the country’s creditors could be ready by the weekend, but it appears other key officials are less confident. “With it being a Friday and the uncertainty around the Greece situation and the disappointing economic data, naturally investors are taking some of their positions off the table,” said JJ Kinahan, a strategist at TDAmeritrade.
Christine Lagarde, the head of the International Monetary Fund, said a Greek exit from the euro remains a possibility, while German Finance Minister Wolfgang Schaeuble also appeared cautious in comments following the end of a meeting of top finance officials in Berlin. Without a deal to receive its remaining bailout cash soon, Greece faces the grim possibilities of defaulting on its debt or ditching the euro. Figures from the European Central Bank showing Greek bank deposits are at their lowest in more than a decade only added to the prevailing gloom.
In energy, the price of oil rose nearly 5 percent Friday on an increase in demand and a surprisingly large decline in the number of rigs drilling for oil in the U.S. Benchmark U.S. crude rose $2.62 to close at $60.30 a barrel in New York. Oil finished the week up 1 percent. Brent crude, a benchmark for international oil used by many U.S. refineries, rose $2.98 to close at $65.56 in London.
In other futures trading on the NYMEX, wholesale gasoline rose 10.1 cents to close at $2.086 a gallon, heating oil rose 8.5 cents to close at $1.955 a gallon, and natural gas fell 6.4 cents—its fifth decline in a row—to close at $2.642 per 1,000 cubic feet.