NEW YORK – Strong growth in the nation's gross domestic product spooked investors and sent stocks mostly lower Wednesday as the data renewed fears that the Federal Reserve would continue raising interest rates. Despite the drop, the market ended November with impressive gains.
The Dow Jones industrial average fell 82.29, or 0.76 percent, to 10,805.87. Broader stock indicators were mixed. The Standard & Poor's 500 index lost 8.00, or 0.64 percent, to 1,249.48, and the Nasdaq composite index rose 0.11, nearly flat, to 2,232.82.
Wall Street endured a third day of flat-to-lower trading despite a recent string of government reports that have painted an uplifting picture of the economy. The Commerce Department said the GDP rose at a 4.3 percent annual rate in the July-September quarter, which reinforced the economy's ability to handle record energy prices following hurricanes Katrina and Rita.
The latest GDP figure, driven by growth in personal spending and business investment, was revised from a preliminary reading of 3.8 percent, and beat economists' forecast of 4 percent growth and a 3.3 percent advance in the prior quarter.
While the Fed has signaled it might stop rate hikes should the economy weaken, the strong economic data is likely to prompt more rate increases, giving the markets pause after reaching 4 1/2-year highs last week. But analysts said there is still room for stocks to advance.
"We've had a great four- to six-week run, and now the economic data has been far better than expected," said Jack Caffrey, equity strategist for J.P. Morgan Private Bank. "So at this point, seeing the market consolidate here makes perfect sense."
Bonds continued to slip after Monday's selloff, with the yield on the 10-year Treasury note rising to 4.50 percent from 4.48 percent late Monday. The dollar was mixed against other major currencies, while gold prices retreated.
Crude futures moved higher after dropping to fresh five-month lows earlier in the session. A barrel of light crude settled at $57.32, up 82 cents, on the New York Mercantile Exchange.
With crude oil futures off of their summer highs and economic data improving, Wall Street enjoyed stellar gains in November. For the month, the Dow gained 3.5 percent, the S&P rose 3.52 percent and the Nasdaq surged 5.31 percent.
Some investors were disappointed at the market's sluggish performance so far this week, however, but held out hope that Thursday's industrial index from the Institute for Supply Management and Friday's monthly job creation report from the Labor Department would further energize stocks.
"What you've had all year long is support for the market: share buybacks, merger and acquisition activity, better-than-expected earnings," said Brian Gendreau, investment strategist for ING Investment Management. "All of that should have propelled the market, but it didn't until (recently) and it's all still there."
With a month to go, the market is still well positioned to end the year in positive territory. For the year to date, the Dow is up 0.21 percent, the S&P has gained 3.1 percent and the Nasdaq has risen 2.64 percent.
Despite a general lift in technology stocks, which propped up the Nasdaq, Blackberry pager maker Research in Motion Ltd. (RIMM) tumbled $3.79, or 5.8 percent, to $61.13 after a Virginia judge threw out the company's proposed patent settlement with NTP Inc.
Yahoo Inc. (YHOO) added 4 cents to $40.23 even after UBS Investment Bank lowered the Internet firm one notch to "neutral," saying it needs to execute on several key initiatives before earnings estimates can be raised.
Smithfield Foods Inc. (SFD), the world's largest pork processor, said its second-quarter profit fell 12 percent, but matched analysts' target before restructuring charges. A sharp rise in beef sales helped revenue grow 7 percent. Smithfield fell 76 cents to $29.23.
Genworth Financial Inc. (GNW) gained 45 cents to $34.45 on news that its stock will be added to the S&P 500 Thursday, replacing troubled energy merchant Calpine Corp., whose stock lost 57 percent on Tuesday after saying its chief executive and finance chief were leaving the company. Calpine fell 3 cents to 51 cents per share.
Declining issues outnumbered advancers by about 7 to 6 on the New York Stock Exchange, where volume came to 1.2 billion shares, compared to the 1.24 billion shares changing hands on Tuesday.
The Russell 2000 index of smaller companies rose 3.60, or 0.53 percent, to 677.29.
Overseas, Japan's Nikkei stock average declined 0.37 percent. In Europe, Britain's FTSE 100 lost 1.23 percent, France's CAC-40 was lower by 0.46 percent for the session, and Germany's DAX index fell 0.12 percent in late trading.