Stock rally fizzles on bad news

For the week ended January 30, 2009

• Economy shrank, prices fell last quarter
• More companies post losses, cut jobs
• Ongoing unemployment rises
• Home prices decline but home resales rise
• ndex of leading economic indicators edges up

To no one’s surprise, the U.S. economy shrank in the fourth quarter of 2008. But the announced 3.8% drop in gross domestic product (GDP) was actually better than many economists had expected. However, excluding a buildup of inventories, the economy contracted 5.1% in the quarter. The U.S. stock market responded to the Friday morning announcement by declining broadly. Read the rest of this entry »