Dow Jones Industrial Average Tumbles 150 Points After US GDP Shrinks; Intel Corporation (INTC) Shares Leap Nearly 2%

U.S. stocks traded lower Friday morning, with the Dow Jones Industrial Average tumbling more than 150 points, as investors weighed data that revealed the U.S. economy shrank in the first three months of 2015, driven by a slowdown in shipping due to labor disputes at West Coast ports. Market professionals also remained cautious as concerns grow over the Greek debt crisis.

The Dow (INDEXDJX:.DJI) dropped 156.88 points, or 0.75 percent, to 17,971.24. The Standard & Poor's 500 (INDEXNASDAQ:.IXIC) dipped 13.24 points, or 0.62 percent, to 2,108. The Nasdaq composite (INDEXSP:.INX) fell 33.67 points, or 0.66 percent, to 5,064.

Greece’s endless debt drama has been one of the main drivers of volatility this week as the country is approaching another deadline for a debt payment. Athens is risking default and exit from the eurozone as it is due to repay the International Monetary Fund 1.6 billion euros ($1.8 billion) next month, with a payment of 300 million euros ($327 million) on June 5.

“The market went down on concerns the Greek problem was going to rear its ugly head again,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “The markets are appropriately responding to a real risk out there, and I don’t think necessarily that risk is fully priced in yet. That’s something we should watch closely in the next couple of weeks.”

Meanwhile, the U.S. economy shrank in the first three months of the year, driven by a slowdown in shipping due to the West Coast port disputes. Gross domestic product, the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 0.7 percent in the first quarter, the Commerce Department said in its second estimate Friday.

However, economists expect momentum to pick up in coming quarters, as a few one-off factors constrained growth in the first three months of the year, chiefly the port disruption on the West Coast and severe winter weather.

“These should not repeat in coming quarters,” Gregory Daco, head of U.S. macroeconomics, said in a research note Friday.

Stuart Hoffman, chief economist at PNC Financial Services Group, agrees. “Harsh winter weather and the West Coast ports labor dispute were both temporary drags on the economy in the beginning of 2015,” he said in a research note Friday. “The economy should bounce back in the second quarter, with growth of at least 3 percent.”

Separately, U.S. consumer optimism topped forecasts in May as the University of Michigan’s consumer sentiment index hit 90.7 in May, down from 95.9 in April. Analysts polled by Thomson Reuters had forecast a slight dip in the index for the month of May at 89.9.

The index rose from its preliminary reading of 88.6 issued earlier this month, which was the lowest reading since October and the largest monthly drop since December 2012.

Although the loss in confidence narrowed in late May, the declines were widespread among all age and income subgroups as well as across all regions of the country. “The decline for the month as a whole was still substantial as consumers have adopted more modest prospects for a rebound following the economy’s dismal first-quarter performance,” Richard Curtin, chief economist at Surveys of Consumers, said in a statement Friday.

Consumer packaged goods company Procter & Gamble Co. (NYSE:PG) led the Dow lower Friday, as the maker of Tide and Pampers lost 1 percent.

The Dow Jones Transport Average dropped 1 percent Friday after tumbling below its 200-day moving average Tuesday. Friday's losses were led by a 4.5 percent decline from freight transportation and logistics company Con-way Inc. (NYSE:CNW).

Intel Corporation (NASDAQ:INTC) was the biggest gainer in the blue-chip index, gaining nearly 2 percent in the midst of reports the chipmaker is close to a deal to buy smaller chipmaker Altera Corporation (NASDAQ:ALTR) for about $15 billion, according to a report in the New York Post. Altera’s stock price jumped 4 percent in morning trading.

Jessica Menton is a writer who covers business and the financial markets. News tips? Email her here. Follow her on Twitter @JessicaMenton.