U.S. Economy Slows; Potential For Fed Rate Cuts Grows

U.S. stock index futures reduced early losses after data indicated the economy grew slower in Q1, increasing hopes for Federal Reserve interest rate cuts. The GDP growth estimate was revised to 1.3% from 1.6%. Personal Consumption Expenditures index also showed inflation trends in line with estimates.

U.S. stock index futures pared early losses on Thursday after data showed the U.S. economy grew more slowly in the first quarter than previously estimated, boosting hopes for interest rate cuts from the Federal Reserve this year. The second estimate for U.S. first-quarter gross domestic product growth was for an increase of 1.3%, versus the prior estimate of 1.6%, and in line with forecasts from economists polled by Reuters.

Data showed the Personal Consumption Expenditures Price Index rose 3.3% in the first quarter. Excluding food and energy prices, the index increased 3.6%, versus an expected 3.7% increase. Additionally, the number of Americans filing new claims for unemployment benefits rose last week to 219,000, versus a forecast of 218,000 new claims.

At 8:36 a.m. ET, Dow e-minis were down 299 points, or 0.78%, S&P 500 e-minis were down 13.25 points, or 0.25%, and Nasdaq 100 e-minis were down 26 points, or 0.14%.