US STOCKS-Wall St on track for lower open after economic data


WALL Street futures pared early losses but stayed on track for a lower open as investors parsed data that showed the economy grew less than previously expected in the first quarter, stoking hopes for an earlier start to the Federal Reserve's rate cuts.

U.S. gross domestic product for the first quarter was lowered to a growth of 1.3%, compared with a previously estimated 1.6% expansion, as a result of downward revisions to consumer spending, the Commerce Department reported.

Ahead of Friday's personal consumption expenditure report for April - the Fed's preferred inflation gauge - preliminary data showed the core Personal Consumption Expenditures Price Index rose 3.6% in the first quarter, versus an expected 3.7% increase.

U.S. Treasury yields dipped following the report, while chances for an at least 25-basis-point interest rate reduction in September edged up to nearly 52%, from 48.7% seen before the data landed, according to the CME Group's FedWatch Tool.

Separately, the number of Americans filing new claims for unemployment benefits stood at 219,000, versus a forecast for 218,000 new claims.

Uncertainty over monetary policy, combined with heavy new Treasury issuance, has pushed bond yields higher, pressuring stocks. Rising bond yields typically reflect expectations of higher interest rates, which in turn means costlier financing and smaller profit margins for companies.

"Less economic growth isn't necessarily all that negative because we're still in a growth pattern, and the good news is that inflation measured by the PCE was revised down... that will help alleviate pressures in the bond market and could cause stocks to stabilize," said Peter Cardillo, chief market economist at Spartan Capital Securities.

The benchmark S&P 500 Index is on track for its biggest weekly drop in six, while the blue-chip Dow closed at a four-week low on Wednesday.

Hawkish commentary from policymakers has also dampened risk sentiment. Traders will assess remarks from New York Fed President John Williams and Dallas Fed President Lorie Logan later in the day.

At 9:03 a.m. ET, Dow e-minis were down 307 points, or 0.80%, S&P 500 e-minis were down 16.5 points, or 0.31%, and Nasdaq 100 e-minis were down 45.5 points, or 0.24%.

Dow component Salesforce forecast second-quarter profit and revenue below Street estimates due to weak client spending on its cloud and enterprise business products, sending its shares down 16.4% in premarket trading.

Meanwhile, HP gained 4.7% after beating Wall Street estimates for second-quarter revenue on Wednesday.

Tesla gained 1.5% after Reuters reported the company was preparing to register its 'Full Self-Driving' software in China.

American Eagle Outfitters dropped 9.5% after the retailer posted downbeat quarterly revenue as sticky inflation hurt demand for its apparel and accessories, often sold full-price.

Dollar General rose 1.9% after the discount retailer posted upbeat first-quarter sales. However, department-store chain Kohl's slumped 24.6% after cutting its annual sales and profit forecasts.

Moderna added 2.3% after a report said the U.S. government was nearing an agreement to fund a late-stage trial of the drugmaker's pandemic bird flu vaccine.

After the United States switched to faster trade settlements for securities, market participants reported some processing bumps, although the move has been smooth overall. - Reuters

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