Slowing Economy Weighs on Stock Futures

Elena
27 Apr, 2007
New York City

The Commerce Department reported Friday that the U.S. economy slowed to 1.3% real annualized growth in Q1, hurt by rising energy prices and a weak housing market, making the weakest expansion in four years. The first estimate of Q1 real GDP came in below the 1.7% expected by economists as well as down from the 2.5% rise in the previous quarter.An inflation gauge tied to the GDP report showed that core prices, excluding food and energy, rose 2.2% in Q1, up from 1.8% in Q4.

[R]9:00AM U.S. stock futures turned lower on weak GDP data.[/R]
U.S. stock futures declined on Thursday on weaker-than-expected GDP data and weakness in the tech sector which offset Microsoft gains. The Commerce Department reported Friday that the U.S. economy slowed to 1.3% real annualized growth in Q1, hurt by rising energy prices and a weak housing market, making the weakest expansion in four years.

The first estimate of Q1 real GD came in below the 1.7% expected by economists as well as down from the 2.5% rise in the previous quarter. An inflation gauge tied to the GDP report showed that core prices, excluding food and energy, rose 2.2% in Q1, up from 1.8% in Q4. Among companies in focus, Microsoft ((MSFT)) climbed 4.9% in pre-open trading after the computer software giant reported a 65% profit rise, lifted by sales of its new Vista operating system and Office 2007.

However, other tech stocks weighed on the sector, as SanDisk ((SNDK)) said weak prices for flash memory chips will continue through the summer and Broadcom ((BRCM)) posted Q2 revenue forecast below expectations. Dow futures expiring in June fell 49, or 0.37%, to 13,120. The Standard & Poor's 500 index futures fell 6.10, or 0.41%, to 1,496.70, and Nasdaq 100 futures fell 8.50, or 0.45%, to 1,897.50.


[R]8:15AM Microsoft Q3 earnings surged 65%.[/R]
Microsoft Corp. ((MSFT)) announced late Thursday that its Q3 profit surged 65%, boosted by sales of new products including the Vista operating system. The world''''s biggest software maker reported earnings of $4.93 billion, or 50 cents a share, compared with $2.98 billion, or 29 cents a share, during the year-earlier period. Revenue rose 32% to $14.4 billion. Quarterly results beat expectations of earnings of 46 cents a share on revenue of $13.89 billion.

Microsoft had been widely expected to post solid growth for the quarter, when it saw significant new product releases including Vista and Office 2007, both released on Jan. 30. Microsoft said its business division, including Office 2007, reported Q3 revenue of $4.83 billion, compared with $3.6 billion a year earlier.

However, Microsoft posted disappointing Q4 outlook. The company said it expects Q4 earnings of between 37 cents a share and 39 cents a share, on revenue of between $13.1 billion and $13.4 billion. The stock rose 5.2% in pre-market trading.