By Sara Sjolin, MarketWatch

Oil slides into bear territory

U.S. stock futures extended losses Friday after data showed that the U.S. economy grew at a slower pace than expected during the second quarter.

The tepid 1.2% annual growth rate was due to a large decline in business investment (http://www.marketwatch.com/story/second-quarter-gdp-rises-just-12-well-below-forecast-2016-07-29), according to the Commerce Department. Meanwhile, first-quarter growth was also revised down to a 0.8% annual rate from the prior estimate of a 1.1% gain.

Earlier, disappointment over Bank of Japan's latest easing action also weighed on sentiment.

Futures for the Dow Jones Industrial Average dropped 50 points, or 0.3%, to 18,326, while those for the S&P 500 index fell 4 points, or 0.2%, to 2,160. Futures for the Nasdaq-100 index rose 3 points, or 0.1%, to 4,723, propelled higher by solid tech earnings.

Headed into July's last trading day, the S&P 500 index and Dow industrials were both looking at monthly gains of more than 3%. The Nasdaq Composite was set for an almost 7% rally for the month.

For the week, however, the Nasdaq was the only index poised for a gain, with the two other benchmarks looking at small losses.

"A moderate stimulus package from the Bank of Japan overnight got the final trading day of the week off to a disappointing start, leaving traders to look towards the large number of earnings and data releases today to pick them up again," said Craig Erlam, senior market analyst at Oanda, in a note.

Early trading was marked by the Bank of Japan, which fell short of the market's hope for a raft of powerful stimulus to boost the country's stubbornly low inflation. The BOJ made no changes to interest rates (http://www.marketwatch.com/story/bank-of-japan-oks-more-stimulus-keeps-rate-steady-2016-07-29) or to its bond-buying program. However, the central bank did increase its purchase of exchange-traded funds to 6 trillion yen ($57 billion) annually from Yen3.3 trillion previously.

The yen rallied after the move (http://www.marketwatch.com/story/yen-climbs-against-dollar-after-boj-fails-to-impress-investors-2016-07-29), sending the dollar down to Yen103.58, from Yen105.27 late Thursday in New York. Japan's Nikkei 225 index initially declined, but ended the day 0.6% higher (http://www.marketwatch.com/story/asian-markets-cautious-as-investors-await-word-from-bank-of-japan-2016-07-28).

The ICE dollar index fell 0.5% to 96.222.

Economic news: The first estimate of second-quarter gross domestic product (http://www.marketwatch.com/story/us-second-quarter-gdp-increases-at-sluggish-12-annual-rate-2016-07-29)came in at a sluggish 1.2% annual rate, far below the expectations of 2.6% pace. Lackluster growth could derail the Federal Reserve's intentions to raise interest rates at a gradual pace.

Second-quarter business inventories contracted for first time since 2011. Meanwhile, employment cost index rose 0.6%.

At 9:45 a.m. Eastern, the July purchasing managers index reading for Chicago is due, followed by data on consumer sentiment for July at 10 a.m. Eastern.

See:

Federal Reserve speakers: San Francisco Fed President John Williams will give a speech on "What's left in the Fed's tool kit?" at the 2016 Pacific Pension & Investment Institute Summer Research program in Boston, Mass., at 9:30 a.m. Eastern.

Dallas Fed President Rob Kaplan is scheduled to speak at the Independent Bankers Association of New Mexico at 1 p.m. Eastern.

Full speed on earnings: Cigna Corp.(CI) kicked off another busy day of corporate results, sliding 4.3% after the health care insurer significantly missed on earnings.

Merck & Co. Inc.(MRK) climbed 1.7% following an earnings beat (http://www.marketwatch.com/story/mercks-profit-and-revenue-rise-above-expectations-2016-07-29).

AbbVie Inc.(ABBV) gained 1.5% after raising its full-year adjusted earnings outlook.

Xerox Corp.'s(XRX) profit rose more than expected (http://www.marketwatch.com/story/xerox-profit-rises-beats-expectations-2016-07-29), but shares were flat premarket.

Exxon Mobil Corp.(XOM) fell 2.6% in premarket trade Friday, after the company's second-quarter profit and revenue fell short of analyst estimates (http://www.marketwatch.com/story/exxon-mobil-shares-fall-26-premarket-after-company-misses-on-profit-and-revenue-2016-07-29). Exxon said it had net income of $1.7 billion, or 41 cents a share, in the quarter, down from $4.19 billion, or $1.00 a share, in the year-earlier period. Revenue fell to $57.7 billion from $74.1 billion.

United Parcel Service Inc.(UPS) shares fell premarket after the shipping company reported earnings in line with expectations.

Chevron Corp.(CVX) slid 1.5% in premarket trade after the company swung to a loss for the second quarter as it booked impairment and other charges.

Shares of Alphabet Inc.(GOOGL) rose 4.5% before the open after the Google-parent late Thursday reported earnings and revenue well above Wall Street expectations (http://www.marketwatch.com/story/googles-alphabet-shares-hit-intraday-record-high-after-earnings-2016-07-28).

Amazon.com Inc. (AMZN) also reported earnings that beat estimates (http://www.marketwatch.com/story/amazon-posts-huge-quarterly-beat-but-very-wide-operating-income-outlook-2016-07-28) late Thursday, sending shares 2.1% higher ahead of the bell.

Gains for tech majors Apple Inc. (AAPL) and Facebook Inc. (FB) helped the S&P 500 index and Nasdaq Composite notch modest gains on Thursday (http://www.marketwatch.com/story/us-stock-futures-edge-up-on-earnings-optimism-hopes-for-boj-action-2016-07-28). The Dow average ended the day lower for a fourth straight session.

Shares of Western Digital Corp.(WDC) fell 2.6% premarket after the computer storage company late Thursday swung to a loss in the latest quarter (http://www.marketwatch.com/story/western-digital-posts-a-loss-but-tops-forecasts-2016-07-28-16485455).

Expedia Inc.(EXPE) slumped 6.5% after reporting earnings late Thursday.

Other markets: European markets marched higher (http://www.marketwatch.com/story/european-stocks-advance-as-bank-shares-move-higher-ahead-of-stress-tests-2016-07-29), with banks leading the charge north ahead of stress-test results from the European Banking Authority (http://www.marketwatch.com/story/europe-stress-test-results-to-put-spotlight-on-italys-troubled-banks-2016-07-28), due after the market closes.

Oil slumped (http://www.marketwatch.com/story/crude-oil-enters-bear-market-after-losing-41-handle-2016-07-29), with the U.S. benchmark sliding into bear territory and losing its grip on the $41 handle.

Gold inched 0.5% higher.

(END) Dow Jones Newswires

July 29, 2016 09:08 ET (13:08 GMT)

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