Wall Street dips on ?European slowdown

From wire services , NBC News ? ? ? 3 hrs.

Stocks fell early Thursday as a slowdown in Europe overshadowed a flurry of mergers in the U.S.

Germany's economy shrank in the final three months of last year. The slowdown in Europe's largest economy deepened the recession across the region. That pulled down European stock markets.

American Airlines and U.S. Airways have agreed to combine in an $11 billion deal that creates the world's largest airline. Ketchup maker H.J. Heinz is selling itself for $23 billion to an investment group that includes Warren Buffett. That acquisition follows another $20 billion deal earlier this month ? Dell Computer's move to take itself private.

On the jobs front, the government reported that the number of people seeking unemployment benefits fell by 27,000 last week, an indication that hiring could improve.

The Dow Jones industrial average was down 51.70 points, or 0.37 percent, at 13,931.21. The Standard & Poor's 500 Index was down 5.62 points, or 0.37 percent, at 1,514.71. The Nasdaq Composite Index was down 13.72 points, or 0.43 percent, at 3,183.16.

Though weakness in Europe has persisted over recent quarters, its implications for global growth and U.S. corporate profits spurred some profit-taking on Wall Street.

A contraction of 0.6 percent in gross domestic product in the euro zone was the steepest for the bloc since the first quarter of 2009, while Japan's GDP shrank 0.1 percent in the fourth quarter, crushing expectations of a modest return to growth.

The S&P 500 has gained 6.6 percent so far this year, though a dearth of fresh incentives has kept trading thin over the past few sessions.

U.S. data showed the number of Americans filing new claims for unemployment benefits fell more than expected in the latest week.

That suggests the job market is improving, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"But it won't be much of a catalyst for the market this morning because of ... the news out of Europe," he said.

Cardillo said a weaker euro, down 0.8 percent versus the U.S. dollar, was also a downward pressure on markets.

Shrinking European economies translated to a 5-percent drop in revenue from the region for Cisco Systems , which nonetheless beat estimates as it reported its results Wednesday. The company's shares pared a more than 2 percent earlier decline to trade 0.6 percent lower before the bell.

General Motors reported a weaker-than-expected fourth-quarter profit on Thursday, also citing bigger losses in Europe alongside lower prices in its core North American market.

Merger and acquisition activity indicated investors saw value in the market even after its recent gains.

H.J. Heinz Co shares jumped after it said that Warren Buffett's Berkshire Hathaway and 3G Capital will buy the company for $72.50 a share, or $28 billion including debt.

U.S. stocks closed little changed in light trading Wednesday, as investors remained cautious after the S&P 500 index hit its highest intraday level since November 2007.

The Associated Press and Reuters contributed to this report.

Source: http://www.nbcnews.com/business/wall-street-dips-european-slowdown-1C8369092

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