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Pre-Market Primer: Economy Grows at Slowest Pace in a Year


GDP beat estimates, but still shrank by nearly half a percentage point from the previous quarter.

MINYANVILLE ORIGINAL Futures were flat today ahead of the bell after US GDP numbers came in ahead of consensus estimates.

The world's largest economy grew at a seasonally adjusted annual rate of 1.5% in the April-June quarter, according to the first of three estimates of GDP growth. This is better than expected, but it is still the slowest growth rate in a year. Growth was 1.9% in the first quarter.

A later report will show that consumer sentiment stayed flat at 72.0 in July, according to a consensus of economists. Ahead of the opening bell, Dow (^DJI) futures stayed unchanged at 12,825.00 and S&P 500 (SPY) futures ticked down 0.01% to 1,354.60. Nasdaq (^IXIC) futures rose 0.13% to 2,575.75.

Misreporting of LIBOR, a scandal that is currently engulfing Barclays (BCS), stretched back to at least 1991, according to a report from a Morgan Stanley (MS) employee that tried noticed rate-fixing early in his career and tried to report it.

Starbucks (SBUX) shares are down 9.63% after the company reported disappointing earnings and lowered its forecast for the next fiscal quarter. CEO Howard Schultz attributes Starbucks' lower profits to "significant global economic and consumer challenges."

Facebook (FB) shares fell 12.24% in after-hours trading despite beating Wall Street's earnings expectations for its first quarter as a public company. Ad revenues were up 28% over last year, but operating margins decreased. Over the course of the quarter, Facebook bought several companies, including Instagram for $1 billion and for at least $55 million.

Amazon (AMZN) had another quarter of low margins and full-steam-ahead investment. One major acquisition that the online retailer made was the $65 million deal for Kiva Systems, which makes robots for inventory management. Earnings per share fell to $0.01 from $0.41 per share. Shares are up slightly today, signaling that Amazon investors are patient enough to allow Jeff Bezos to take over the universe before they see a huge return on the $220 stock with a P/E ratio of 269.

Samsung (SSNLF) managed to ship 50.5 million smartphones in the second quarter, fueled by its much-hyped Galaxy SIII. This puts Samsung in first place, nearly doubling Apple's (AAPL) iPhone shipments, and well ahead of Nokia's rapidly deteriorating smartphone business. Samsung forecasts even greater demand for its products in coming quarters.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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