Traders-Blog.com

Today was a bad day for the market due to investors’ concerns that the economy may be slowing down. The Dow ended down 128.43 points to close at 10,070.37. Besides, the Nasdaq hit a new yearly low, falling 26.25 points, to close at 1,904.18. Meanwhile, the S&P fell 13.16 points, to close at 1,143.22.

According to the Commerce Department, gross domestic product (GDP) showed an annual pace of growth of 3.1 percent, which represents a percentage down from the 3.8 percent rise in the fourth quarter of 2004. It was the slowest quarter since the 1.9 percent annual rate reported in the first quarter of 2003. The GDP increases worries about slower economic growth and higher prices. This economic environment is called stagflation.

U.S. light crude oil for June delivery settled up 16 cents to close at $51.77 a barrel on the New York Mercantile Exchange. Earlier in the session, oil fell as low as $49.80. Exxon slid $2.38 to close at $56 which caused the big drop in the S&P, and the Dow. Exxon reported first quarter profit of $1.15 a share, which showed a decrease from analysts’ expectations.

Microsoft Corp., the world’s biggest software maker, fell 54 cents to close at $24.45. However, in after-hours trading, the company’s shares rose 17 cents to $24.62. Microsoft reported that fiscal third-quarter net income rose to $2.56 billion, or 23 cents a share, from $1.32 billion, or 12 cents last year.

U.S House and Senate Republicans reached an agreement on a budget plan that cuts about $10 billion from spending on Medicaid during five years and calls for about $70 billion in tax cuts. Republicans said that the Medicaid costs are the main point of a plan to pare back the U.S budget deficit, which reached $412 billion last year. On the other side, democrats said the plan does not cut the deficit, but undercuts the needs for health care for Medicaid beneficiaries.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter