Before the bell: Stock futures higher ahead of GDP data

Posted Oct 29th 2009 7:35AM by Melly Alazraki
Filed under: Before the Bell, Exxon Mobil (XOM), Market Matters, Sprint Nextel Corp (S), Procter and Gamble (PG), Economic Data

U.S. stock futures were mildly higher, indicating a positive open for this Thursday morning following the previous session's sell-off. However, all bets are off before the U.S. releases third quarter gross domestic product that would give a better picture of the state of the U.S. economy and growth. The GDP data will no doubt affect investors' mood once released at 8:30 a.m., or an hour before the opening bell.

[Update 9:00 a.m.: The economy grew at a 3.5% pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. Futures got a boost from the reading.]

Economists expect GDP to have grown at a 3.2% annualized rate in the third quarter, according to Briefing.com after shrinking at an 0.7% annualized rate in the second quarter. If true, it would mean the economy is back on its feet after being knocked over by the worst recession since the 1930s. But many attribute the growth to government support programs such as cash for clunkers and mortgage modification and wonder what the fate of the economy be once gone.

The GDP expansion in the third quarter would end a streak of four straight quarters of contraction, the first time that's happened on records dating to 1947. This would signal the economy is in recovery and that the recession, which started in December 2007, is over. Economists polled by Thomson Reuters forecast an even bigger increase of 3.6%.

Still, despite the government spending that managed to induce consumer spending, unemployment is still high and rising. At the same time as GDP, weekly initial and continuing jobless claims data will be released. Also, following Wednesday's selloff that was triggered by a surprise decline in new-home sales and Tuesday's unexpected fall in consumer confidence, again, the strength of the recovery remains in question.

Another wave of earnings is also on tap today, including from such heavyweights as Exxon Mobil (NYSE: XOM), Procter & Gamble (NYSE: PG) and Sprint Nextel (S).

Overseas, Asian stock markets fell for a third day following the U.S. markets and increased fears about the health of the global economic recovery. European stock markets traded flat on Thursday as investors awaited quarterly growth data from the U.S. later in the day for insight into the state of the world's biggest economy.

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Reader Comments (Page 1 of 1)

10-29-2009 @ 9:41AM

e.krabs said...

I would really love to be wrong here, but I am of the current opinion that much of this growth, and the subsequent GDP report, is artificially induced by our government stimulus.

As such, I do believe I will be taking some more off the table today.

10-29-2009 @ 9:45AM

Warren said...

"As such, I do believe I will be taking some more off the table today."

Think long term.

10-29-2009 @ 11:49AM

e.krabs said...

Pardon me, but this is Bloggingstocks, not Bogleheads. And we're not talking about 30 year investment strategies here. We're talking about a short-term GDP report. And right or wrong, there are traders here with various strategies, which does include locking profit from time to time.

Not that I disagree with you, but please consider that before deciding to tell somebody else to simply "think long term".