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Wall St. likes GDP report
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April 27, 2001: 9:14 a.m. ET
Growth of 2%, stronger than economists expected, gives futures a lift
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NEW YORK (CNNfn) - U.S. investors got their first glimpse of how the economy fared in the first quarter Friday and apparently liked what they saw, driving stock futures higher in advance of Friday's Wall Street open.
The futures, little changed through much of the morning, jumped after the government reported growth at a 2 percent annual rate in the first quarter, indicating surprising strength in the world's largest economy.
Investors breathed a sigh of relief that the United States does not seem headed for a recession, even though the report may make another aggressive interest rate cut by the Federal Reserve less likely.
Nasdaq-100 futures rose as much as they could, a sign of a higher start for the Nasdaq market, while Standard & Poor's futures also advanced, indicating a rise for the S&P 500 and Dow Jones industrial average as trading opens.
The Commerce Department report came after the big slowdown in growth has hurt stocks, led to thousands of layoffs, and caused President Bush to try to use it to win support for his tax cut plan.
The Fed has cut rates aggressively four times this year in a bid to prevent a recession.
Besides the GDP report, merger speculation in the telecom industry is in the background.
 The Wall Street Journal reported Friday that France's Alcatel (ALA: Research, Estimates) has held preliminary talks about an acquisition of U.S. rival Lucent Technologies (LU: Research, Estimates. The Journal said officials of both companies declined comment on whether discussions have expanded beyond those confirmed Thursday by Alcatel about a possible purchase of Lucent's fiber-optic business. Lucent shares closed Thursday at $10.68, up 50 cents, while Alcatel's American depositary shares finished up 35 cents at $29.85.
The Nasdaq composite index begins the session at 2,034.88 after falling 1.2 percent Thursday. The Dow Jones industrial average is at 10,692.35 following a 67-point advance, while the S&P 500 starts at 1,234.52 after gaining nearly 6 points.
Asian stock markets finished mixed, with Tokyo's Nikkei index lower and Hong Kong's Hang Seng index gaining. European markets slipped in morning trading.
Treasury prices fell with the GDP report, sending yields higher. The 10-year note yield rose to 5.27 percent from 5.19 percent late Thursday, while the 30-year bond yield increased to 5.75 percent from 5.70 percent.
The dollar gained against the yen and the euro. Brent oil futures slid rose 18 cents to $27.58 a barrel in London.
Two prominent overseas corporations -- Sony (SNE: Research, Estimates) of Japan and Unilever (UL: Research, Estimates) of Europe -- reported results early Friday.
Sony Corp. of Japan said net profit sank 86 percent for its latest fiscal year, missing its own recently increased forecast, but it scored its first rise in annual operating profit in three years. Sony's American depositary receipts rose 19 cents to $75.10 Thursday.
Unilever, the Anglo-Dutch food and household products maker, reported that annual profit declined 61 percent due to costs related to the acquisition of Bestfoods. The company's U.S. shares rose 41 cents Thursday to $29.66.
Corning (GLW: Research, Estimates), the maker of fiber-optic cable, reported first-quarter profit late Thursday that topped forecasts but warned of lowered earnings and sales estimates for the rest of 2001, citing the continued economic slowdown in the United States. It also added 1,000 job cuts to the 3,300 previously announced. Corning shares fell 98 cents to $21 in Thursday trading.
Starbucks (SBUX: Research, Estimates) reported fiscal second-quarter earnings met analysts' expectations. But even coffee drinkers are taking the economic slowdown to heart -- the company warned of slowing revenue and per store sales growth for the rest of 2001. Starbucks shares fell a nickel to $39.68 Thursday.
 Among the companies reporting results Friday morning was cosmetics marketer Avon Products (AVP: Research, Estimates), whose first-quarter earnings of 34 cents a share were above both the analysts' consensus of 33 cents and the year-earlier figure of 30 cents, according to a survey by First Call. Avon shares rose 61 cents Thursday to $38.40. 
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