US open: Stocks mostly lower after GDP misses forecasts

US stocks were mostly lower on Friday as official data showed the nation’s economy grew much less than expected in the second quarter.

The Dow Jones Industrial Average fell 0.29%, the S&P 500 dropped 0.07% while the Nasdaq increased 0.1% at 1537 BST.

US gross domestic product grew at an annual rate of 1.2% compared to 0.8% growth in the first quarter and expectations for a 2.6% increase, according to preliminary data released by the Commerce Department. First-quarter growth was revised down from a previous estimate of 1.1%.

Personal consumption rose at a rate of 4.2% in the second quarter, while spending on services was up 3%.

The Commerce Department also released annual revisions, which showed the economy grew 2.6% in 2015 from the year before. This was the biggest yearly gain since 2006.

Dennis de Jong, managing director at UFX.com, said: “Memories of the US economy being shaken by China’s meltdown and rock bottom oil prices seem a long time ago now, but today’s GDP numbers show the world’s largest economy is facing a new set of challenges in sluggish growth and weak spending.

“Regaining momentum in the wake of an unsettled European market will be the next challenge for Janet Yellen and Co. If the US economy can get back on track and prove to be resilient in the face of Brexit then Yellen may just think it’s time for another interest rate hike come Autumn.”

Capital Economics said the data makes a September interest-rate hike much less likely.

Meanwhile, consumer sentiment in the US deteriorated a touch more than expected in July amid concerns about the UK’s vote to leave the European Union. The University of Michigan’s final reading of the consumer sentiment index fell to 90.0 from 93.5 in June and 93.1 in July last year. Economists had been expecting a decline to 90.5.

The Chicago purchasing managers’ index rose to 55.8 in July from 56.8 in June, beating forecast for a reading of 54 and above the 50 level that separates expansion from contraction.

In corporate news, Cigna Corp slumped as it slashed its guidance for the year and posted worse-than-expected second quarter earnings.

Xerox gained after it reported quarterly profit that beat forecasts as it cut costs.

UPS edged lower as it reported in line second quarter earnings.

Exxon Mobil Corp dropped as the oil producer’s second quarter profit trailed estimates.

Amazon was higher after its second-quarter earnings late on Thursday beat expectations.

Alphabet was also in the black after Google’s earnings late on Thursday surpassed estimates.

In commodity markets, oil prices slumped with West Texas Intermediate down 0.34% to $41.00 per barrel and Brent crude down 1.6% to $42.01 per barrel.