Wall Street indexes were on track to open lower on Friday after data showed U.S. economic growth slowed more than expected in the fourth quarter, while inflation picked up in December.
U.S. gross domestic product increased at a 1.4 per cent annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate of fourth-quarter GDP, much below economists’ forecast for GDP rising at three per cent.
GDP growth was hurt by disruptions from last year’s record government shutdown and moderating consumer spending.
A separate report showed underlying U.S. inflation increased more than expected in December, with indications of further acceleration in January. The Personal Consumption Expenditure index, the U.S. Federal Reserve’s preferred inflation gauge, rose 0.4 per cent in December on a month-over-month basis, compared to economists’ estimate of a 0.3 per cent rise.
Traders stuck to bets the Fed will probably deliver its next interest-rate cut in June after the data.
“(A) combination of a little bit lower growth than we were looking for in the GDP release and a little bit higher inflation than we were anticipating in the PCE – that’s generally not a good combination for the stock market,” said Steve Wyett, chief investment strategist at BOK Financial.
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“We don’t think the Fed needs to be aggressive in their rate cuts. So on balance, this data that we got today still fits within that narrative.”
S&P Global’s business activity survey and the University of Michigan’s consumer sentiment data are due later in the day.
Investors were also watching for a possible U.S. Supreme Court ruling on U.S. President Donald Trump’s tariffs that could be handed down at 10:00 a.m. eastern time. If they are struck down, there is a risk that more than USD$175 billion in U.S. tariff collections will need to be refunded, according to Penn-Wharton Budget Model economists.
At 8:56 a.m. eastern time, S&P 500 e-minis fell 19.25 points, or 0.28 per cent, Nasdaq 100 E-minis dropped 105.75 points, or 0.43 per cent, and Dow E-minis 107 lost points, or 0.22 per cent.
Private capital firm Blue Owl Capital
shed 1.8 per cent in premarket trading, after falling 5.9 per cent in the last session, when the company’s latest strategy to return capital from a small debt fund and permanently halt redemptions at one of the funds rattled investors and dragged peers down.
Other private equity firms including KKR & Co and Apollo Global Management also fell one per cent each.
Technology stocks have been pressured in recent months due concerns over high valuations and limited evidence that massive investments in AI were paying off. Sectors ranging from software to real estate were hammered last week by concerns that new AI models could upend their business models.
Oil prices dropped from six-month highs as investors assessed the fallout from growing tensions between Washington and Tehran, with Trump warning Iran it must make a deal over its nuclear program or “really bad things” would happen.
Energy stocks including Exxon Mobil and Chevron were slightly lower after rising in the previous session.
Akamai Technologies slid 7.4 per cent after the cloud company forecast first-quarter adjusted profit below Wall Street estimates.
Copart lost 10.1 per cent after the online vehicle auction services provider posted a decline in second-quarter profit and revenue.
