Wall Street set for lower open after weak growth data
Wall Street was set for a one percent drop at the open on Friday after data showed the U.S. economy grew less than expected last quarter, heightening fears about the uncertain outlook for the rest of the year.
Earnings added to the gloom after drugmaker Merck & Co reported results that beat Wall Street expectations but said sales were less than forecast. The stock fell 2.5 percent to $34.20 in premarket trade.
Chevron Corp , the second-largest U.S. oil company, reported a three-fold jump in quarterly profit, topping Wall Street forecasts but its shares were down 0.6 percent at $75.60 in premarket trading.
The Commerce Department's gross domestic product (GDP) report, the first estimate of economic growth for the April-June period, showed U.S. economic growth slowed in the second quarter as a capital investment drive by business saw imports increasing at their fastest pace since the first quarter of 1984. The GDP expanded at a 2.4 percent annual rate versus analysts' forecast of 2.5 percent.
Investors have been rattled by disappointing data recently, and more are talking about the possibility of a double-dip recession.
That puts us pretty close to a double-dip. With the economy growing at less than 2 percent, the unemployment rate is likely to be rising, and rising unemployment at a time where we're taken away the stimulus for housing means that we are likely to see home sales that are going to be weaker and foreclosures are likely to increase and home prices are likely to come back down, said Mark Vitner, senior economist at Wells Fargo Securities in North Carolina.
S&P 500 futures fell 10 points and below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 94 points and Nasdaq 100 futures lost 18.25 points.
Shares of MetLife Inc , the biggest U.S. life insurance company, rose 2 percent to $41.00 in premarket trading on Friday, a day after the company reported second-quarter operating earnings that beat expectations.
Separately, New York's attorney general has subpoenaed MetLife and Prudential Financial Inc as part of a probe into whether life insurers are defrauding families of deceased military personnel by siphoning off millions of dollars of death benefits for themselves.
Other data on tap for Friday include the Chicago PMI for July at 9:45 a.m. and a final July reading of the Reuters/University of Michigan consumer sentiment index at 9:55 a.m. Economists in a Reuters survey expect a lower reading of 56.5 for the Chicago business barometer index and a slight rise to 67 for the consumer sentiment index.
The S&P 500 fell for a third straight day on Thursday and ran into resistance around its 200-day moving average as investors searched for a catalyst to take stocks higher.
(Reporting by Angela Moon; ; Editing by Theodore d'Afflisio)
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