Futures rise on Alphabet, Boeing earnings ahead of GDP dataFutures rise on Alphabet, Boeing earnings ahead of GDP data
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

By C Nivedita and Shreyashi Sanyal

(Reuters) – U.S. stock index futures rose on Wednesday, bolstered by solid earnings reports from Google-parent Alphabet and Boeing that provided some optimism as the country moved cautiously to ease lockdowns, while investors braced for data which could reveal a sharp contraction in the domestic economy.

Alphabet Inc <GOOGL.O> jumped 7.1% in premarket trading as a drop in Google ad sales steadied in April and some consumers returned to using the search engine for shopping in addition to finding coronavirus information.

“This is helping to reinforce the market leadership,” said Edward Park, deputy chief investment officer at London-based firm Brooks Macdonald.

Park added that positive results from companies like Alphabet added to the narrative that technology-related names have been less disrupted by coronavirus and therefore should continue to outperform.

Boeing Co <BA.N> reported a loss for the second straight quarter, but shares jumped 4% as the planemaker said it was confident of obtaining sufficient liquidity to fund its operations going forward.

Wall Street’s main indexes closed down on Tuesday, as investors shifted out of growth stocks and into more value-oriented cyclical companies.

But the main indexes have recovered 30% from their lows in March, boosted by aggressive stimulus efforts and, more recently, hopes of an economic revival as states begin to relax lockdown measures.

The U.S. economy likely contracted in the first quarter at its sharpest pace since the Great Recession as strict lockdown measures curbed consumer activity, ending the longest expansion in the nation’s history.

The Commerce Department’s report, due at 8:30 a.m. EDT, is expected to show a 4% decline in gross domestic product (GDP), which will further reinforce analysts’ forecasts that the U.S. economy was already in a deep recession.

“Although the backward-looking data is unlikely to have a major impact on markets, it does form the base for the Q2 print, which is widely forecast to plunge into negative double-digit territory,” said Han Tan, a market analyst at FXTM.

At 08:02 a.m. ET, Dow e-minis were up 129 points, or 0.54%. S&P 500 e-minis were up 15.25 points, or 0.53% and Nasdaq 100 e-minis were up 61.5 points, or 0.71%.

Analysts now expect S&P 500 earnings to decline 14.8% from a year ago, a dramatic U-turn from the 6.3% year-on-year growth seen on Jan. 1, according to Refinitiv data.

General Electric Co <GE.N> fell 5.9% after its industrial businesses took a $1 billion hit to cash flow in the first quarter and warned the damage would worsen in the next three months.

Also up is a policy decision from the Federal Reserve and more corporate earnings reports from technology heavyweight Microsoft Corp <MSFT.O>, social media giant Facebook Inc <FB.O> and electric car-maker Tesla Inc <TSLA.O> after the bell.

The Fed is slated to issue its policy statement at the end of its two-day meeting on Wednesday at 2 p.m. EDT (1800 GMT), where the central bank is anticipated to reiterate its promise to do whatever it takes to support the world’s largest economy.

(Reporting by C Nivedita and Shreyashi Sanyal in Bengaluru; Editing by Bernard Orr)