US stocks lower after GDP report

S&P 500 Index futures fall 0.2% to 2,160.75 as data shows slower growth than forecast

US stock-index futures slipped after data showing the American economy grew slower than forecast last quarter gave the Federal Reserve no reason to accelerate its time table for higher interest rates. Earnings from Alphabet Inc boosted technology shares.

S&P 500 Index futures fell 0.2 per cent to 2,160.75 at 8:38am in New York. The contract initially accelerated losses after data showed gross domestic product rose at a 1.2 per cent annualised rate, below the median forecast of economists surveyed by Bloomberg. It pared those losses as investors assessed components of the report that showed an resilient consumer spending.

‘This was a much weaker than expected GDP number despite the fact that the personal consumption piece was very strong,” said Phil Orlando, who helps oversee $360 billion (Dh1.3 trillion) as chief equity-market strategist at Federated Investors Inc in New York. “This probably takes a September rate hike off the table and suggests the Fed’s on hold until December at the earliest.”

The S&P 500 has climbed 3.4 per cent in July, a fifth monthly rise, boosted by earnings reports and optimism central banks will support the global economy. While the Federal Reserve earlier this week held its rates unchanged as forecast, the Bank of Japan yesterday damped expectations for looser policy by keeping its key monetary tools unchanged and saying it will mount a comprehensive review of its policy framework.

The GDP data comes as investors sift through one of the busiest weeks of the earnings season. Halfway through, more than 80 per cent of the S&P 500 companies that have reported so far beat profit projections and almost 60 per cent topped sales estimates. Analysts have eased their expectations for a drop in second-quarter earnings to 4.5 per cent.

Google parent Alphabet Inc rose in premarket trading after its quarterly profit topped estimates. Amazon.com Inc climbed after forecasting sales that may exceed analysts’ projections. Cigna Corp declined after the health insurer reported quarterly earnings that missed estimates and cut its full-year forecast. Exxon Mobil Corp fell on its results. Sensex (IN)