Decline in GDP doesn't worry stocks

U.S. stock-index futures were little changed, after the benchmark Standard & Poor’s 500 Index (CME:SPM14) halted a four-day winning streak, as data showed the economy contracted for the first time in three years from January through March.

Abercrombie & Fitch Co. jumped 7.2 percent as the clothing retailer posted a first-quarter loss that was narrower than analysts estimated. Palo Alto Networks Inc. climbed 13 percent after the computer-security company’s earnings beat forecasts. Twitter Inc. rallied 2.4 percent on an analyst upgrade. Tilly’s Inc. slumped 28 percent after giving a profit forecast that missed estimates.

S&P 500 futures expiring next month rose less than 0.1 percent to 1,910.10 at 8:34 a.m. in New York. The S&P 500 yesterday snapped a four-day rally that sent it to a record.

“General sentiment is that ‘sell in May and go away’ is not the way, with the S&P 500 having reached new highs,” said Manish Singh, who helps manage $2 billion as head of investments at Crossbridge Capital LLP in London. “Getting out of stock would be premature.”

 

ECB Meeting

Gross domestic product fell at a 1 percent annualized rate in the first quarter, a bigger decline than projected, after a previously reported 0.1 percent gain, the Commerce Department said today in Washington. The last time the economy shrank was in the same three months of 2011. The median forecast of economists surveyed by Bloomberg called for a 0.5 percent drop.

Jobless claims fell by 27,000 to 300,000 in the week ended May 24, a Labor Department report showed today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 318,000. The four-week average declined to the lowest level since August 2007, before the last recession began.

Separate data will probably show that pending home sales rose 1 percent in April, economists estimated before the report due at 10 a.m. They rose 3.4 percent the prior month.

Abercrombie & Fitch jumped 7.2 percent to $37.65. The clothing retailer posted a first-quarter loss that was narrower than analysts estimated as new styles of shorts and crop tops slowed its sales decline. Chief Executive Officer Mike Jeffries has been working to revive Abercrombie’s appeal among teenage shoppers who’ve strayed from the chain in favor of fast-fashion purveyors such as Forever 21 and Hennes & Mauritz AB.

 

Palo Alto

Palo Alto Networks climbed 13 percent to $78.60. The company posted third-quarter adjusted earnings per share of 11 cents, compared with the 10 cents analysts had estimated. It reported revenue of $150.7 million, topping the $146.2-million analyst forecast.

Twitter rallied 2.4 percent to $34.59 as Cantor Fitzgerald raised the stock to a buy from hold. The operator of the social- networking site surged 11 percent yesterday, reversing a two- week slide amid a rout in technology stocks.

Tilly’s slumped 28 percent to $7.64 after the retailer forecast second-quarter profit of 3 cents to 7 cents a share, trailing the 13 cents analysts had projected. The company also posted first-quarter revenue of $111.1 million, compared with the $113.3 million analyst estimate.

 

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