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NEW YORK - US stock markets closed lower Thursday as a government report confirmed US economic growth moderated sharply during the fourth quarter of last year and as Oracle's results disappointed investors.
Sentiment was further dented as the president of the Federal Reserve Bank of Atlanta, Dennis Lockhart, said the economy's current lackluster performance looked similar to past periods that marked "the leading edge of a recession."
The Dow Jones Industrial Average closed down 120.40 points (0.97 percent) at 12,302.46.
The Nasdaq composite lost 43.53 points, and a heftier 1.87 percent, to 2,280.83 and the broad market Standard & Poor's 500 index tumbled 15.37 points (1.15 percent) to a close of 1,325.76.
Technology stocks bore the heaviest losses in the wake of Oracle's earnings update late Wednesday.
Despite the pullback, some analysts expressed confidence that the sharp stock market depression of recent months could be ebbing.
"Our financial system has been through a serious test and it takes time to heal those wounds and restore confidence. The good news is that we are in the healing process," said Al Goldman, a chief market strategist at AG Edwards.
While more recent economic reports than the gross domestic product (GDP) survey continue to post lackluster readings, some economists believe the nation's long-running housing downturn could be showing signs of stabilization.
A growing number of economy-watchers, however, believe the economy has fallen into a recession since the end of 2007.
The government's final report on fourth-quarter GDP left its prior estimates of 0.6 percent unchanged, as had been widely expected.
The government revised some of the report's inflation gauges to show price pressures were not as strong as previously assumed.
Federal Reserve policymakers, led by central bank chairman Ben Bernanke, have aggressively slashed the short-term federal funds rate to 2.25 percent from 5.25 percent since September in a bid to keep growth shored up.
The central bank's rate-cutting drive has, however, been complicated by rising inflationary pressures, particularly as crude oil prices have surged above 100 dollars this year.
Some analysts believe this will make it harder for the Fed to continue slashing rates although Bernanke has said that he expects slowing growth to temper inflation pressures.
The Atlanta Fed chief, in remarks prepared for a speech in Tennessee, said: "It's clear the economy is in a slowdown that resembles past periods that were the leading edge of a recession.
"I expect that GDP for the first quarter of this year will show little, if any, growth," Lockhart said.
Oracle Corp.'s shares came under pressure after the company said its fiscal third-quarter profits rose 30 percent to 1.34 billion dollars, but revealed sales that fell well below most analysts' projections.
The business software giant's shares ended 7.2 percent weaker at 19.43 dollars.
Clear Channel Communications, America's biggest radio station operator, was also in focus as its proposed 19.5-billion-dollar buyout by a two big private equity firms looked to be in jeopardy amid a deepening legal spat.
The radio and media group's shares closed up 10 percent at 29.60 dollars.
Bond prices declined as the yield on the 10-year US Treasury bond rose to 3.534 percent from 3.494 percent Wednesday and that on the 30-year bond climbed to 4.376 percent from 4.330 percent.
Bond yields and prices move in opposite directions.
European stock markets fared better as London's FTSE 100 index ended up 1.01 percent at 5,717.50. In Paris, the CAC 40 added 0.92 percent to 4,719.53 while in Frankfurt the Dax rose 1.37 percent to 6,578.06.
- AFP /ls
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