US open: Stocks decline on disappointing GDP as investors await Fed decision

LONDON (ShareCast) - US stocks slid on Wednesday, as investors digested disappointing economic data and awaited a statement from the Federal Reserve for further hints about the interest rate outlook. At 15:00 in London, the Dow Jones Industrial Average was down 43 points, while the S&P 500 and the Nasdaq lost five and 12 points respectively.

The central bank's meeting will conclude at 19:00 BST on Wednesday with a statement, which will be closely monitored by investors looking for clues on the timing of a first rate hike.

"There is a strong determination to raise rates among members of the FOMC but they are equally concerned about derailing the economic recovery at a time when so many headwinds exist," said Oanda's senior market analyst Craig Erlam.

"They'll want to see at least some of these pass before they act, particularly the inflation concerns as this is a core aspect of their mandate." US gross domestic product (GDP) expanded by far less than expected over the first three months of the year, although some activity gauges had been hinting at just such an outcome.

GDP expanded at a 0.2% quarter-on-quarter annualised pace in the first three months of the year, well below the 1% expected by analysts and the 2.2% growth seen in the fourth quarter.

"The slowdown looks temporary, as a rebound from the first-quarter weakness is already being signalled by forward-looking survey data, but the sustainability of any upturn is by no means convincing yet," said Chris Williamson, chief economist at Markit (NasdaqGS: MRKT - news) . "Policymakers will probably want to see how the economy performs in the second quarter before passing judgement on whether the time is right to start the process of normalising policy.

"That leaves September as the first realistic possibility of rates being hiked, providing of course that the economy bounces back in coming months." US pending home sales rose for the third consecutive month in March, reaching the highest level since June 2013.

Figures released by the National Association of Realtors, showed the index rose 1.1% month-on-in March to a seasonally adjusted 108.6, in line with consensus expectations.

In corporate news, Twitter (Xetra: A1W6XZ - news) fell 3.86% after the group reported a wider-than-expected loss and sales missed estimates late on Tuesday.

The social media giant saw its target price cut from $50 to $40 by analysts at Wedbush, while analysts at JP Morgan slashed their target from $67 and $55.

Time Warner (Xetra: AOL1.DE - news) rose 0.58% after its first-quarter profit and sales beat expectations, while wearable video cameras-maker GoPro (Xetra: A1XE7G - news) soared 13% after it reported late on Tuesday that its first-quarter profit had jumped 52%.

Hilton Worldwide Holdings climbed 4.28% after reporting a 25% increase in first-quarter earnings, while sector peer Wynn Resorts (NasdaqGS: WYNN - news) plunged 14.2% after revealing on Tuesday it had swung to a loss.

The dollar fell 0.50% and 0.91% against the pound and euro respectively and gained 0.19% against the yen, while gold futures slid 0.52% to $1,207.60.

Oil prices fell, with West Texas Intermediate losing 0.6% to $56.72 a barrel, while Brent dropped 0.2% to $64.51 a barrel.