Wall St. may take GDP cue

January 30, 2002 Posted: 1356 GMT

NEW YORK (CNN/Money) -- A surprising rise in fourth-quarter gross domestic product pushed U.S. stock futures higher Wednesday, suggesting Wall Street may find some impetus to rise -- despite renewed accounting and corporate worries -- ahead of the Federal Reserve's decision on interest rates.

The Commerce Department said GDP, the broadest measure of the nation's economy, rose at an annual rate of 0.2 percent. Economists surveyed by Briefing.com had expected GDP to fall at an annual rate of 1.1 percent, compared with a 1.3 percent contraction rate in the third quarter of last year.

Fed policy makers are to conclude a two-day meeting with a decision on  rates Wednesday afternoon. Economists generally agree the central bank will hold short-term rates steady after cutting them11 times starting early last year.

But what may be more closely watched by investors is the statement the Fed issues with its decision, expected around 2:15 p.m. ET. A signal that the economy is beginning to turn around could give a boost to the markets.

Also competing with investor attention will be the aftermath of President Bush's State of the Union message.

Issues of war and the economy dominated the president's address to Congress Tuesday. Investors may react to Bush's warnings to Iran, Iraq and North Korea, all accused of supporting terrorist activities and developing weapons of mass destruction, as a signal that the nation's battle against terrorism will expand.

The president also called for a bipartisan effort to stimulate the economy, and he called for the nation's corporations to be more accountable to investors, a veiled reference to the Enron scandal.

Enron's implosion was on Wall Street's mind Tuesday as investors, concerned that other companies with accounting question marks could suffer the same fate, sold with conviction.

Two more companies with accounting questions were hurt in before-hours trading.

Irish-based Elan's (ELN: Research, Estimates) American depositary shares fell $6.91 to $37.10 after a Wall Street Journal article raised questions about accounting practices by the pharmaceutical company.

Energy company Anadarko Petroleum (APC: down $0.88 to $47.40, Research, Estimates) restated its third-quarter loss, widening it due to an accounting error. Shares of the stock were down $3.90 to $43.50 in before-hours trade.

The Dow Jones industrial average starts at 9,618.24 – its lowest level in 2-1/2 months – after tumbling 247 points Tuesday. The Nasdaq composite index is at 1,892.99 following a 51-point skid, while the Standard & Poor's 500 stock index starts at 1,100.64, having fallen 32 points.

Asian stocks followed their U.S. counterparts lower, with Tokyo's Nikkei index finishing Wednesday below 10,000 for the first time since October. European bourses were lower at midday.

Treasury prices fell, with the 10-year note yield rising to 5 percent from 4.99 percent late Tuesday. The dollar fell against the yen and was flat versus the euro. Brent oil futures fell 31 cents to $18.93 a barrel in London.

Data storage maker Veritas Software (VRTS: Research, Estimates) fell $2.46 to $43.69 in before-hours trading Wednesday. The company posted a fourth-quarter profit excluding certain items that topped analysts' estimates and gave a first-quarter revenue forecast that was above prior projections. But an analyst quoted by Reuters said investors expected more aggressive guidance from the company.

AOL Time Warner (AOL: down $1.20 to $26.70, Research, Estimates), the parent of CNN/Money, said it earned 33 cents in its fourth-quarter, in line with estimates, and an improvement on the 14 cents per share earned one year earlier. Shares of AOL fell 1 cent to $26.70 in before-hours trade.

AT&T (T: Research, Estimates), the telecom and cable service provider, posted fourth-quarter profit of 5 cents a share, slightly above the First Call consensus of 4 cents but well below the 26 cents a share earned a year earlier. The company's shares lost 61 cents to $17.81 Tuesday.