US stocks edged lower after data by the US government showed that the economy barely grew in the first quarter and investors awaited a statement from the Federal Reserve after its two day policy meeting later in the day.
The S&P 500 Index fell by 7 points or 0.4% to 2107.6 points with most of its 10 key sectors, led by materials and utilities, trading in the negative.
The Dow Jones Industrial Average most recently dropped 116.5 points or 0.64% to 18,056.19 after declining by more than 140 points immediately after the data.
The Nasdaq Composite fell about 48.42 points or 0.8% to 5010.3 to slip out of record territory for the first time this week.
The US economy grew at a lower than expected 0.2% annualized rate in the first quarter this year curbed by extreme weather, a major conflict and a robust dollar that limited exports.
Economics polled by the Wall Street Journal had forecasted that GDP would grow by about 1% in the quarter after clocking more than 2.2% in the fourth quarter of 2014.
The Federal Reserve, during its two day meeting that started on Tuesday, will be able to assess the data before its statement expected at the end of the meeting.
Most market analysts expect the weak data, coupled with weaknesses during the earnings season, to influence the Fed’s decision to delay hiking the interest rates.
“The Fed may be in a hurry to start the process of raising rates, but they are really not in a hurry to get them to normal levels in a hurry,” Kristina Hooper, U.S. investment strategist at Allianz Global Investors, told MarketWatch.
“The GDP number is not going to be a surprise to the FOMC members, as the Atlanta Fed’s real-time growth indicator was very close to this reading. We will watch closely how they view it – whether it is transitory or has staying power,” Hopper added.
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