The group representing Chicago-area purchasing executives reported a much steeper drop in Midwest business activity than analysts predicted. The Dow Jones industrial average, after rising in the first minutes of trading, turned lower.
The data followed the Commerce Department's report on first-quarter gross domestic product. The GDP's contraction of 5.7 percent was slightly larger than analyst forecasts, and personal spending was revised lower. But the drop was smaller than the 6.1 percent estimated last month, and the data showed corporate profits rising.
On the last day of trading in May, the Dow is still on track for a third straight monthly gain. The index would have to drop 236 points Friday to finish the month lower.
May, however, has been the shakiest month since the market's rally began in early March. Investors' enthusiasm about the economy's stabilization is turning into skepticism about how strong growth will really be once a bottom is hit.
New worries are weighing on investors: Climbing interest rates, a weaker dollar and rising commodity prices. Crude oil prices recently hit a six-month high above $65 a barrel, while the dollar on Friday sank to multi-month lows against the euro and British pound. Some analysts say these developments are simply the consequence of a recovery in the economy and the financial markets, but others warn these trends could threaten the economy's health in the long-term.
Another more short-term obstacle for the market is General Motors Corp.'s expected bankruptcy filing on Monday, the automaker's restructuring deadline. The market has been factoring in the likelihood of a GM bankruptcy for months, but investors still are unsure what the fallout might be for auto suppliers and other companies.
In early trading Friday, the Dow slipped 10.67 points, or 0.1 percent, to 8,393.13. The Standard & Poor's 500 index fell 0.45, or 0.1 percent, to 906.38. The Nasdaq composite index fell 1.40, or 0.1 percent, to 1,750.39.
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