US pre-open: Stocks to drop as Amazon earnings disappoint

US futures pointed to a weaker open on Wall Street on Friday, with technology shares set for another sharp drop following disappointing earnings from Amazon, as investors awaited the release of second-quarter economic growth figures.

At 1055 BST, Dow Jones Industrial Average and S&P 500 futures were off 0.2% and 0.3%, respectively, while futures on the tech-heavy Nasdaq were down 0.9% as Amazon traded down 2% pre-market after posting a 77% drop in second-quarter earnings on Thursday.

CMC Markets analyst Michael Hewson said: "US markets look set to open lower with Amazon likely to open on the back foot after a disappointing reaction in after-hours trading to its latest quarterly update.

"Starbucks also disappointed as the coffee giant fell short on profits, prompting a similar sell off after hours. The company announced that it would be closing all itsTeavana stores would be closing. It would appear that American shoppers are either losing their appetite for tea, or it could simply be that fewer shoppers are visiting shopping malls due to the growth of on-line shopping. It is likely that it is the latter that is the problem as opposed to the former. Chip maker Intel fared a little better with a beat on the headline number as well as revenues."

Earnings were due ahead of the opening bell from Exxon Mobil, Chevron, Merck and American Airlines.

On the data front, the main focus will be on the release of second-quarter US GDP at 1330 BST, while University of Michigan consumer sentiment is due at 1500 BST.

IG analyst Joshua Mahony said: "Traders will be keeping a close eye on the latest US GDP reading in the afternoon, with markets expecting to see a marked improvement on the disappointing first quarter figure of 1.4%. Improvements across a number of recent economic data points are likely to see that figure rise somewhat, with a big jump in personal consumption (2.8% from 1.1%) one of the key drivers of these heightened expectations.

"With the Fed having been in focus this week, there will be significant attention paid to today’s core personal consumption expenditure (PCE) figure, which is expected to tumble from 2.0% to around 0.8%."