Report of slowing GDP hits stocks in early trading

By STEPHEN BERNARD and SARA LEPRO

posted: 17 MINUTES AGO

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NEW YORK -Stocks are slightly lower Tuesday after the government said the economy grew at a slower pace in the third quarter than originally reported.

The updated report from the Commerce Department showed the nation's economy grew at a 2.8 percent rate in the July-September period, down from an initial estimate of 3.5 percent — fresh evidence that while a recovery is under way, it is likely to be slow and bumpy. Economists polled by Thomson Reuters predicted the rate would be revised to 2.9 percent.

Slow consumer spending, weakness in commercial construction and the nation's trade gap all likely contributed to the slowing of economic growth. Later Tuesday morning, investors will get a preliminary report on consumer confidence in November.

The cautious trading comes after stocks soared Monday on a weaker dollar and an upbeat report on housing. The Dow Jones industrials broke a three-day losing streak, rising 133 points to a new 13-month high.

The dollar was slightly lower against other major currencies. The dollar's weakness has been a big driver behind higher stock prices this year. Investors have been taking advantage of record-low interest rates to invest in assets other than cash that can earn them better returns.

However, as the end of the year approaches, investors have become hesitant to add a lot of risk and potentially upset the big gains they've amassed since the stock market began rallying in March.

In early trading, the Dow Jones industrial average fell 27.51, or 0.3 percent, to 10,423.44. The Standard & Poor's 500 index fell 1.71, or 0.2 percent, to 1,104.53, while the Nasdaq composite index fell 3.47, or 0.2 percent, to 2,172.54.

2009-11-24 09:56:00