KEITH BEDFORD/Reuters
U.S. stock index futures fell on Friday as investors took profits after three days of gains, and as GE's results spotlighted the impact of slowing European growth on multinational companies.
General Electric Co. reported earnings that beat expectations by a penny, though revenue was below expectations on weakness in Europe. Shares fell 0.7 per cent in premarket trading.
"GE's European business was soft, and that's a concern for a lot of companies this earnings season," said Cort Gwon, chief strategist at HudsonView Capital Management in New York. "How will austerity in Europe impact multinationals? GE is a microcosm for the concerns we've having about the global economy."
In another sign of trouble abroad, Spain said it sees its economy contracting by 0.5 per cent in 2013, with unemployment above 23 per cent through 2014.
Earnings have lifted Wall Street in recent days, with technology and bank shares helping to drive the S&P to a 2-1/2 month high. Still, weak economic data, including on manufacturing and employment, served as reminders of the headwinds still facing markets, prompting some investors to lock in recent gains.
Of the 19 per cent of S&P 500 companies reporting earnings so far, 65 per cent have beaten expectations, slightly better than the yearly average since 1994, according to Thomson Reuters data.
A pair of major tech companies reported late Thursday, and both rallied on the results. Microsoft Corp. reported adjusted earnings and revenue that beat expectations, while Google Inc.'s revenue surged 21 per cent, easing worries a sluggish global economy would take a toll on the company's online advertising.
On a net basis, Microsoft posted its first-ever net quarterly loss as a public company because of a previously announced write-down on the value of an ailing unit. Still, shares rose 1.8 per cent to $31.22 in premarket trading. Google added 2.7 per cent in light volume.
S&P 500 futures fell 8.3 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 55 points and Nasdaq 100 futures sank 5.25 points.
For the week, the Dow is up 1.3 per cent, the S&P is up 1.5 per cent and the tech-heavy Nasdaq is up 2 per cent. The S&P is at its highest level since early May. Some investors are pointing to a trading range between recent highs above 1,400 and a low in June around 1,280.
"We've had a nice run in the beginning of earnings season and people are taking some profits now," Mr. Gwon said.
In other earnings news, Schlumberger Ltd climbed 1.9 per cent to $69.93 as revenue rose more than expected on international growth. Xerox Corp fell 5.4 per cent to $6.80 after cutting its full-year profit forecast.
Prices on U.S. 30-year government bonds rose 1 point early Friday, adding to earlier gains, as a disappointing auction of Spanish debt intensified worries that the euro zone's fourth biggest economy might need a full-blown bailout.
The yield on 10-year Spanish government debt rose above 7 per cent, a borrowing threshold that traders consider unsustainable.
The U.S. long bond was trading up 1-2/32 at 109-3/32 in price with a yield of 2.562 per cent, down 5 basis points from late on Thursday.