* First-quarter U.S. GDP weaker than forecast
* Procter & Gamble, Starbucks shares down on costs
* Futures down: Dow 19 pts, S&P 2.3 pts, Nasdaq 4.5 pts
* For up-to-the-minute market news see []
(Updates market activity)
By Edward Krudy
NEW YORK, April 28 (Reuters) - Wall Street was set for a
lower open on Thursday after a report showed the U.S. economy
grew less than expected in the first quarter and a number of
companies pointed to rising costs.
U.S. economic growth slowed more than forecast in the first
three months of the year as higher food and gasoline prices
dampened consumer spending and sent a broad measure of
inflation rising at its fastest pace in 2-1/2 years. Growth was
1.8 percent compared to a Reuters consensus estimate of 2
percent. []
In Wednesday's session the Nasdaq hit a 10-year high on the
prospect of continued low interest rates and liquidity until
the end of June, after Federal Reserve Chairman Ben Bernanke's
first-ever news conference.
"With the amount of injection of capital into the economy,
you'd hope that we would be able to get above 2 percent
growth," said William Larkin, a portfolio manager with Cabot
Money Management. "In the short-term this is bad for stocks and
good for bonds."
S&P 500 futures <SPc1> fell 2.3 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures <DJc1> dropped
19 points, and Nasdaq 100 futures <NDc1> lost 4.5 points.
In a Labor Department report, new U.S. claims for
unemployment benefits surprisingly rose last week to their
highest level since January in a sign an anticipated recovery
in labor markets may take time.
Earnings season has been strong but there were signs of
creeping costs from some companies. Procter & Gamble Co <PG.N>
lowered the high end of its profit forecast as it trimmed
expenses and increased prices to offset rising materials costs.
Its shares fell 1.4 percent to $63.15 in premarket trading.
[]
Rising costs were also in evidence at Starbucks Corp
<SBUX.O> . The company warned on Wednesday that costs will take
a bigger chunk out of earnings than previously anticipated, and
its full-year forecast disappointed Wall Street. The shares
fell 2.5 percent to $36.24 in premarket trade.
But many investors are bullish, with around three-quarters
of S&P 500 companies beating Wall Street's earnings forecasts
so far and with the prospect of continued low interest rates at
least until the end of the year.
"The 'sell in May and go away' is not likely to happen
this year," said Peter Cardillo, chief market economist at
Avalon Partners, referring to an old stock market adage about
the traditionally weaker May and summer months for equities.
Aetna Inc <AET.N> raised its full-year profit forecast,
continuing a string of strong results for the health insurance
industry. The shares rose 9.2 percent to $43.49 premarket.
U.S. crude oil futures rose to their highest in 2-1/2 years
and metal prices rallied as the Fed appeared in no rush to
tighten monetary policy. Spot gold hit a record at $1,534.30 an
ounce.
The dollar sank to a three-year low against a basket of
currencies and was at risk of a drop to $1.50 versus the euro,
with momentum-driven investors anticipating that U.S. interest
rates will be low for a long time.
(Editing by Padraic Cassidy)
