Stocks Lose Some Steam

Updated from 4:02 p.m. EST

Stocks closed lower Friday with the S&P 500 snapping its nine-week winning streak, after a batch of mixed economic data added to existing investor uneasiness over the outlook for interest rates.

The Dow lost 22.22 points, or 0.2%, to 10,488.07; the S&P 500 shed 2.99 points, or 0.3%, to 1131.13; and the Nasdaq fell 2.08 points, or 0.1%, to 2066.15

The Dow finished the week down 0.8%, the S&P 500 dipped 0.9% and the Nasdaq declined 2.7%. Both the blue-chip and tech indices closed lower for the second week in a row for the first time since mid-November.

Volume on the New York Stock Exchange was 1.64 billion shares, while 1.9 billion shares exchanged hands on the Nasdaq. Despite the losses, advancers outpaced decliners by about 5 to 4 in both markets.

"Investors are still digesting what the Fed said on Wednesday and trying to figure out what groups are going to do well, if we are in an interest rate rising environment," said Todd Leone, a senior trader at SG Cowen. "If we are in a rate-rising environment, I don't expect a hike for another four to six months.

"I don't think the economic statistics are that important, except for labor," Leone continued. "The Fed is looking at jobs, and that is why they have held off so much."

In economic news, gross domestic product expanded by a 4% annualized rate in the fourth quarter, after the prior quarter's 8.2% surge; economists had expected the economy to grow by 5%. Providing some consolation to stocks, the price deflator decelerated to 1.0% from 1.6% in the third quarter, with the consensus looking for a 1.3% increase. Virtually every measure of inflation remains benign and should not force drastic Fed tightening.

Much stronger than expectations, the Chicago purchasing managers index rose to 65.9 in January from last month's revised 61.2 reading. The consensus was looking for a slight rise to 62.1.

The University of Michigan revised its January consumer sentiment reading up marginally to 103.8 from 103.2, close to expectations. In December, the survey stood at 92.6.

Other Markets

Markets overseas finished mostly lower. London's FTSE 100 fell 0.5% to 4391 and Germany's Xetra DAX dropped 0.9% at 4059. In Asia, Japan's Nikkei finished fractionally higher at 10,784, and Hong Kong's Hang Seng lost 0.3% at 13,289.