Wall Street was set to drop at the open on Friday after disappointing quarterly results from Dow components General Electric Co
GE's weaker-than-expected revenue and Bank of America's loss show U.S. businesses and consumers continue to struggle as the economy slowly recovers from the worst recession in decades.
The results are also a reality check for investors wowed by some strong corporate earnings earlier in the week.
To see GE's revenue down so much really says something about the economy, and really has to make you question what kind of recovery is taking place here, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
It's not a good morning to say the least, he said.
Bank of America's loss stemmed from consumer credit losses, and it blamed continued weakness in the U.S. and global economies and stress on the consumer. GE, although beating earnings estimates, reported-lower than-expected revenue as sales fell across all its diverse businesses.
Bank of America's shares fell 5 percent to $17.22, and GE dropped 3 percent to $16.28 in premarket trade.
Although it is still very early into earnings season, we're seeing that the positive momentum is rapidly diminishing, said Hans-Juergen Delp, chief strategist at Commerzbank in Frankfurt.
S&P 500 futures were down 5.2 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 were down 26 points, while Nasdaq 100 futures fell 4.50 points.
Economic data due later in the day includes the Reuters/University of Michigan Surveys of Consumers preliminary sentiment index for October, expected to stay even with late September's reading of 73.5.
Also due is a measure of U.S. industrial production in September, expected to rise 0.2 percent, according to a forecast from a poll of economists by Reuters.
Oil futures headed lower, back toward $77 per barrel, a day after hitting a one-year high that helped drive a late rally in stocks that pushed indexes into positive territory.
International Business Machines Corp also
(Reporting by Edward Krudy; Editing by Padraic Cassidy)