U.S. Stocks Fall After GDP Trails Forecast, Jobless Claims Rise

U.S. stocks declined for a second day after the economy grew less than forecast, jobless claims jumped and Sprint Nextel Corp. and Freddie Mac reported record losses.

Sprint, the third-biggest U.S. wireless carrier, retreated the most in the Standard & Poor's 500 Index after posting a $29.5 billion loss and eliminating its dividend. Freddie Mac, the second-largest mortgage-finance company, slipped to the lowest since November after rising defaults sent credit costs higher. Sears Holdings Corp. fell after profit plunged more than analysts expected.

The S&P 500 declined 9.16 points, or 0.7 percent, to 1,370.86 at 9:35 a.m. in New York. The Dow Jones Industrial Average decreased 98.34, or 0.8 percent, to 12,595.94. The Nasdaq Composite Index lost 13.25, or 0.6 percent, to 2,340.53. About seven stocks fell for every two that rose on the New York Stock Exchange.

The U.S. economy in the fourth quarter grew at an annual rate of 0.6 percent, less than forecast and reflecting reduced estimates for spending and construction. Initial jobless claims increased by 19,000 to 373,000 in the week ended Feb. 23, the Labor Department said. Total benefit rolls rose for a second straight week to the highest since October 2005.

Profit Slump

The S&P 500 has dropped 6.7 percent this year on concern the collapse of subprime mortgages and a slowdown in the world's largest economy will drag down profits. Earnings for S&P 500 companies will shrink this quarter and next, according to analysts' estimates compiled by Bloomberg.

Sprint Nextel today fell 98 cents, or 11 percent, to $7.97 on the NYSE. The company posted a $29.5 billion loss and will eliminate its dividend as customers defected and it wrote down the value of the purchase of Nextel Communications Inc.

Freddie Mac declined 66 cents to $25.75. The company posted a $2.45 billion loss.

Sears, the retailer controlled by investor Edward Lampert, reported fourth-quarter profit that plunged more than analysts projected after appliance and clothing sales declined. The stock lost $3.32 to $98.28.

Most U.S. stocks retreated yesterday as a slump in utilities and drugmakers offset speculation Federal Reserve Chairman Ben S. Bernanke will cut interest rates to avert a recession.