NEW YORK, April 27 (Reuters) - U.S. stocks on Thursday were seen taking their cues from reports on first quarter labour costs and economic growth, with stronger-than-expected figures expected to put an already hesitant market into reverse.
``The market is looking a little lower,'' said James Volk, co-director of institutional trading at D.A. Davidson & Co. in Portland, Ore. ``The real swing factor will be the economic numbers. If they are stronger than expected, stocks are going to go down. People are really concerned about inflation.''
The Standard & Poor's 500 index futures for June was off 3.50 points at 1,472 while the Nasdaq 100 index futures for June lost 1.50 points to 3,526.
At 8:30 a.m. EDT (1230 GMT), the Labour Department will release the Employment Cost Index, with economists polled by Reuters forecasting a 0.9 percent rise in the first quarter, after the previous quarter's revised 1.0 percent gain.
Any surprise spike in the labour costs number could spook a market already on the defensive given the Federal Reserve's repeated warnings that record levels of U.S. employment could cause a flare-up in inflation.
``It could really jolt the markets with a potentially more aggressive Fed (Federal Reserve) through the remainder of this year if you get the long-awaited sustained upswing in labour costs everyone's been waiting for for years,'' said Cary Leahey, senior U.S. economist at Deutsche Bank Securities, Inc.
Simultaneously, the Commerce Department will report U.S. Gross Domestic Product (GDP) for the first quarter, which economists polled by Reuters expect grew by 5.9 percent, compared with 7.3 percent late last year.
Key in the GDP report will be the GDP deflator, a wide gauge of price pressures in the economy, which is expected to have grown by 2.2 percent, compared to 1.9 percent in the fourth quarter.
In both reports, surprisingly high numbers are likely to rattle Wall Street as they could suggest the Fed, which meets next on May 16 to consider raising interest rates, might opt for a more aggressive hike in borrowing costs than the anticipated quarter of a percentage point rise.
``Anything that is too strong could be negative to the Street,'' said Larry Wachtel of Prudential Securities.
In early trading, the U.S. Treasury 10-year note rose 4/32, with the yield down to 6.12 from Wednesday's close of 6.14 percent. The U.S. Treasury 30-year bond was up 4/32 with the yield falling to 5.94 percent from Wednesday's close of 5.95 percent.
On Wednesday, the blue-chip Dow Jones industrial average (^DJI - news) lost 179.32 points, or 1.61 percent, to 10,945.50, a day after closing with a 218-point gain.
Interest-rate-sensitive financial stocks pressured the gauge after climbing higher for several sessions. American Express Co. (NYSE:AXP - news) fell 3 to 155 and J.P. Morgan & Co. (NYSE:JPM - news) slipped 3-3/8 to 134-9/16.
Technology stocks weakened despite pockets of strength in the computer-chip and Internet sectors. The Nasdaq composite index (^IXIC - news) dropped 81.14 points, or 2.19 percent, to 3,630.09, after surging 6.57 percent on Tuesday.
The Standard & Poor's 500 index (^SPX - news) fell 16.45 points, or 1.11 percent, to 1,460.99, and the Wilshire 5000 index (^TMW - news) ended down 158.76 points, or 1.17 percent, at 13,449.27.
Among some of the stocks to watch on Thursday, Amazon.com Inc. (NasdaqNM:AMZN - news) on Wednesday posted a smaller first-quarter loss than Wall Street had expected, as the online retailing giant nearly doubled revenues and said all its businesses were marching toward profitability. Its stock closed at 53-1/2 ahead of the news.
Shares of telephone giant AT&T Corp.'s (NYSE:T - news) wireless tracking stock AT&T Wireless Group Inc. (NYSE:AWE - news) were set to begin trading on Thursday after pricing at $29.50 per share on Wednesday, raking in a hefty $10.62 billion for AT&T through a deal that ranks as the largest U.S. initial public offering in history. AT&T closed at 50-5/8.
Celera Genomics (NYSE:CRA - news), a biotechnology research company, on Wednesday said its fiscal third-quarter loss widened 80 percent, but less than Wall Street expected, as the company boosted spending on its research teams and equipment. Its stock finished at 66-7/8 ahead of the news.
Reader's Digest Association Inc. (NYSE:RDA - news), publisher of the world's most widely read magazine, reported its third-quarter earnings rose a higher-than-expected 25 percent as costs fell sharply and book sales climbed. Its stock closed at 33 ahead of the news.
Health insurance giant Aetna Inc. (NYSE:AET - news) posted first-quarter earnings of $1.29 a share on Thursday before the market opened. Its stock closed at 55-3/16. |
