Bloomberg News

U.S. Stock Futures Trim Gains as Growth Trails Estimates

April 27, 2012

Traders at the Chicago Board Options Exchange work in S&P 500 stock index options pit in Chicago, Illinois. Photographer: Tim Boyle/Bloomberg

Traders at the Chicago Board Options Exchange work in S&P 500 stock index options pit in Chicago, Illinois. Photographer: Tim Boyle/Bloomberg

U.S. stock-index futures trimmed gains after government data showed economic growth trailed forecasts in the first quarter.

Futures on the Standard & Poor’s 500 Index expiring in June rose less than 0.1 percent at 8:21 a.m. in New York after climbing as much as 0.3 percent earlier.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate, Commerce Department figures showed today in Washington. That followed a 3 percent pace in the prior quarter and compared with the 2.5 percent median forecast of economists surveyed by Bloomberg News. Household purchases, which account for about 70 percent of the economy, increased 2.9 percent, exceeding projections.

The S&P 500 has rallied 1.6 percent this week after Apple Inc. posted earnings that almost doubled, joining about three- quarters of companies to beat the average analyst earnings estimate about halfway through the reporting season. The index is down 0.6 percent in April and poised to snap a four-month streak of gains, its longest since 2009.

Investors are “getting spooked by uncertainty” surrounding the U.S. budget deficit and reemergence of Europe’s debt crisis, mirroring concerns at this time of year in 2011 and 2010, according to Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co. in New York. The S&P 500 tumbled 19 percent from its 2011 high in April to its low in October. In 2010, it slid 16 percent from an April peak to its July low. This year, it has slipped 1.3 percent from an almost four-year high on April 2.

While the parallels of 2012 to 2011 “are striking, the downside risks, in our view, are lower,” Lee wrote in a note to clients, saying that the U.S. budget standoff and Japan’s tsunami and nuclear disaster aggravated concerns last year. “In a nutshell, same frequency, different amplitude,” he wrote.

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net


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