US pre-open: Wall Street futures fall as GDP revised sharply lower

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LONDON (ShareCast) - US stocks were expected to extend losses on Wednesday after a worse-than-expected downwards revision to gross domestic product (GDP) estimates for the first quarter.

Stock futures on the Dow Jones Industrial Average were down around 0.3% as of 08:49 in New York. The Nasdaq and S&P 500 were showing similar losses ahead of the opening bell.

The Dow quickly erased early gains on Tuesday to finish down 0.7% - its worst one-day performance in over a month - after reports that Syrian air raids killed at least 50 people inside Iraq's borders.

David Madden, Market Analyst from IG (LSE: IGG.L - news) , said: "It was the rapidity of the move, rather than the actual percentage change, that should serve as a warning that markets are still vulnerable. Compared to what could happen if the Iraq situation really worsens, such moves are just ripples on the surface."

US GDP revised sharply lower

The third estimate of US first-quarter GDP showed that the economy shrunk at a 2.9% annualised rate in the first quarter of 2014, well below the previous estimate of a 1% contraction.

This was the biggest annual decline in GDP since early 2009 and well below analysts' expectations for a revision to -1.9%.

It was also the biggest downward revision to the Commerce Department's second GDP estimate since records began in 1976, mainly due to a bigger-than-expected slowdown in healthcare spending.

In other economic data, durable goods orders unexpectedly declined by 1% in May, after a revised 0.8% increase the month before.

Barnes & Noble (NYSE: BKS - news) to split

Shares in bookstore chain Barnes & Noble climbed in pre-market trade after the company reported narrower quarterly losses and said it would split its retail and Nook media business into two separate companies.

General Mills (NYSE: GIS - news) was lower after the packaged food group said it would embark on a new cost-cutting plan as it disappointed with fourth-quarter results.

West Texas Intermediate futures were up 0.4% at $106.44 a barrel before the opening bell.

The yield on a 10-year US Treasury was down four basis points at 2.54%.

BC

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