U.S. stocks closed

U.S. stocks declined after the economy barely grew in the first quarter and investors weighed the timing for a possible interest-rate increase as the Federal Reserve said part of the weakness was transitory.

The Standard & Poor's 500 Index slipped 0.4 percent to 2,106.80 at 4 p.m. in New York, after earlier falling as much as 0.8 percent.

"It confirms people's view that the Fed won't raise interest rates in June - that's certainly driven home today by GDP growth," said Kristina Hooper, a U.S. investment strategist at Allianz Global Investors in New York. The firm oversees $499 billion. "But there is still some question mark because the Fed is blaming part of downturn in the first quarter on transitory factors."

Fed officials have said they expect to raise rates this year for the first time since 2006 as the economy nears full employment, and that their decision will be guided by the latest data. They had said last month that they would be unlikely to raise rates at their April meeting.

A run of disappointing economic data has cast doubt on how quickly the Fed can meet its goals for full employment and stable prices.

"Economic growth slowed during the winter months, in part reflecting transitory factors," the Federal Open Market Committee said in a statement Wednesday. "The pace of job gains moderated," it said, and "underutilization of labor resources was little changed."

A report earlier Wednesday showed growth almost ground to a halt in the first quarter, held back by severe winter weather and slumping business spending and exports.

Gross domestic product, the volume of all goods and services produced, rose at a 0.2 percent annualized rate after advancing 2.2 percent the prior quarter. The median forecast of 86 economists surveyed by Bloomberg called for a 1 percent gain.

"If they had taken out the word 'transitory,' you probably would have had the equity market turn positive," said Quincy Krosby, a market strategist at Prudential Financial Inc., in Newark, New Jersey. Prudential oversees more than $1 trillion in assets. "Just having that in there shows the Fed does believe it was, in fact, transitory i.e. we are going to be pushing into a rebound soon."

The S&P 500 has risen 1.9 percent this month, rebounding from a drop in March, after earnings from companies including Merck & Co. and Microsoft Corp. beat analysts' estimates. About 74 percent of the S&P 500 companies that have reported earnings this season have beaten analysts' profit projections, while 48 percent topped sales estimates.