Stocks to get GDP turbulence

NEW YORK (CNNMoney.com) -- Wall Street investors are headed for a rough start to trading Friday after the government delivered the weakest quarterly reading on economic activity in four years.

Stock futures tumbled following the first-quarter GDP report, indicating a fall at the open for stocks.

Gross domestic product or GDP, which measures total goods and services output within U.S. borders, increased at a weaker-than-expected 1.3 percent annual rate in the three months from January through March.

Economists surveyed by Briefing.com had forecast first-quarter GDP up at an annual rate of 1.8 percent, down from the 2.5 percent growth rate in the fourth quarter.

John Silvia, chief economist for Wachovia, had said that if the GDP growth came in below 2 percent, it would spark a sell-off in stocks, particularly after the recent rally that has resulted in a series of record highs for the Dow and six-year highs for other major indexes.

"Even though the consensus is 1.8 percent, I don't think it's all priced in to stocks yet," he said. "People are going to be nervous anytime the first number there is a one."

In other news, shares of Microsoft (Charts, Fortune 500) should garner some attention on Wall Street a day after the tech bellwether posted better than expected revenue and earnings, lifting its shares 5 percent in extended trading.

But overseas markets also appeared cautious awaiting the U.S. GDP report. Stocks in Asia closed lower, while major indexes in Europe were slightly lower in early trading.

Oil waslittle changed in early trading. U.S. light crude up 12 cents to $65.18 a barrel in electronic trading.

Treasury prices rose, pushing the yield on the 10-year note lower to 4.66 percent from 4.69 percent late Thursday.

The dollar retreated against the euro and the yen after a strong rally Thursday. Friday, the Bank of Japan left interest rates unchanged and lowered its inflation forecast.

The GDP report will include a number of closely watched inflation measures. One, known as the chain deflator, is forecast to show prices up at an annual 3.2 percent rate on high food and energy prices, compared with only a 1.7 percent rise in the fourth quarter, when energy prices were lower.

Other economic reports due Friday are the Employment Cost Index, which economists forecast posted the same 0.9 percent gain in the first quarter that it saw in the fourth quarter, and the latest reading on consumer confidence from the University of Michigan.

Economists are looking for that index to edge up to 85.5 from 85.3 earlier this month.

In other corporate news, another Dow component, Citigroup (Charts, Fortune 500), announced late Thursday that it succeeded in its bid to acquire control of Nikko Cordial, Japan's No. 3 brokerage, by securing more than 60 percent of its stock in an all-cash deal valued at $7.7 billion.

Wells Fargo (Charts, Fortune 500), the nation's No. 5 bank and one of the nation's largest subprime lenders, agreed late Thursday to pay up to $6.8 million to settle a class-action lawsuit accusing it of improper nonprime mortgage lending practices in California.