* Citigroup shares slump after Fed rejects capital plan
* GDP grew 2.6 pct in Q4; jobless claims unexpectedly drop
* Dow off 0.02 pct; S&P 500 down 0.2 pct; Nasdaq off 0.5 pct
(Updates to midday, changes byline)
By Chuck Mikolajczak
NEW YORK, March 27 U.S. stocks slipped on
Thursday as some positive economic data failed to counter
lingering geopolitical concerns, although losses were limited as
the end of the quarter approached.
The U.S. economy grew a bit faster than previously estimated
in the fourth quarter and new claims for jobless aid dropped to
a near four-month low last week, but contracts to buy previously
owned homes fell in February to their lowest level since October
"Data has largely been in line. It's been incredibly uneven,
and that is another reason why there is some hesitancy," said
Peter Kenny, chief executive officer of Clearpool Group in New
Markets were also pressured by a steep drop in Citigroup Inc
shares, which suffered their biggest daily decline since
November 2012 after the Federal Reserve rejected the bank's
capital plan. The S&P financial index lost 0.9 percent
and was the worst-performing sector.
The benchmark S&P 500 Index managed to hold above the 1,840
level, which has acted as support recently, as the end of the
quarter approached and money managers engaged in "window
dressing," adjusting positions to improve the look of their
"The market has been given plenty of reasons to sharply sell
off and it does not seem as though there is that spirit to do
it. Clearly we are coming to the end of the quarter and no one
is particularly interested in marking the book down," Kenny
The United States and the European Union on Wednesday agreed
to prepare possibly tougher economic sanctions in response to
Russia's annexation of Ukraine's Crimea territory.
While Western leaders had said earlier that they would hold
off on new sanctions unless Moscow takes further destabilizing
actions in the region - which Russian President Vladimir Putin
last week said he wasn't interested in doing - investors are
concerned about the potential fallout of a prolonged conflict.
Concerns about the effect of sanctions on Russia's energy
sector and global supplies helped push crude oil prices and the
S&P energy index higher. In addition, Exxon Mobil Corp
gained 1.1 percent to $95.71 after Bank of America
Merrill Lynch boosted its rating on the stock to "buy."
Citigroup tumbled 5.8 percent to $47.25 a day after the Fed
rejected the bank's plan to buy back $6.4 billion of shares and
boost dividends, saying it wasn't sufficiently prepared to
handle a potential financial crisis. A source close to the
matter told Reuters that Citi officials had not expected the
The Fed also rejected Zions Bancorp's plan late on
Wednesday. Shares of Zions Bancorp slid 1.2 percent to
$29.84 by midday on Thursday.
The Dow Jones industrial average fell 3.70 points or
0.02 percent, to 16,265.29. The S&P 500 lost 3.92 points
or 0.21 percent, to stand at 1,848.64. The Nasdaq Composite
dropped 20.923 points or 0.5 percent, to 4,152.655.
Equities have been volatile this week, moving on any sign of
easing or rising tensions in the biggest conflict between Russia
and the United States since the Cold War. While data has
supported the market, investors used the uncertainty over
Ukraine to take profits in some of the market's biggest
outperformers, especially in the technology and biotech sectors.
TriNet Group Inc jumped 18.9 percent to $19.02 in
its trading debut a day after it went public at $16 per share.
The initial public offering valued the cloud-based payroll
processer at about $1.09 billion.
(Editing by Jan Paschal)