* Alphabet, Amazon tumble on weak results, forecasts
* Growth stocks hit; Facebook, Apple, Netflix down 2-5 pct
* GDP growth slows less-than-expected in 3rd-qtr
* Futures down: Dow 0.72 pct, S&P 0.90 pct, Nasdaq 1.77 pct (Changes comments, updates prices)
By Amy Caren Daniel
Oct 26 (Reuters) - U.S. stock index futures dropped on Friday as grim earnings reports from Amazon and Alphabet rekindled a rush to dump technology and high-growth stocks, but losses were cut on data showing economic growth slowed less than expected last quarter.
Gross domestic product increased at a 3.5 percent annualized rate in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years and a surge in inventory investment.
The expansion, while slower than the previous quarter’s 4.2 percent pace beat economists’ prediction of a 3.3 percent pace and is now in its ninth year, the second longest on record.
“This is seen as a slight positive. There’s less pressure on the Federal Reserve to do something (on interest rates),” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
“Right now we’re seeing a slightly positive effect by the markets, since they’re not down as much, but this will be short-lived because the more important thing would be earnings of Google and Amazon.”
While U.S. economic growth continues apace, despite trade wars, the same cannot be said of U.S. corporate profit growth, with a slew of disappointing forecasts this earnings season showing how tariffs, rising wages and borrowing costs as well as jitters over geopolitical events are hitting companies.
The latest, and perhaps most high-profile, instance came last night from Amazon.com Inc and Alphabet Inc , two of the stocks that have helped power the equity markets decade-long bull run.
Amazon tumbled 7 percent premarket after it not only missed quarterly sales estimates, but also gave a below par holiday-season sales forecast. Amazon Web Services only narrowly beat estimates.
Google-parent Alphabet sank 4.3 percent after its revenue missed estimates, fanning concerns that investments in new businesses, rising regulatory scrutiny and competition are producing slow, unpredictable returns.
That triggered a drop in other members of the so-called FAANG group. Facebook Inc fell 3.1 percent, Apple Inc slid 1.6 percent and Netflix Inc dropped 3.8 percent.
“When the stocks that are carrying the markets begin to crack, investors are going take cover. Investors are waiting for more visibility for things to see where the rotation takes them,” said Bakhos.
At 8:57 a.m. ET, Dow e-minis were down 179 points, or 0.72 percent. S&P 500 e-minis were down 24.25 points, or 0.9 percent and Nasdaq 100 e-minis were down 122.5 points, or 1.77 percent.
A clutch of weak outlooks on Wednesday pushed the Nasdaq into correction territory, when an index closes 10 percent or lower than its record-high close, and erased the Dow and the S&P 500’s gains for the year. On Thursday, Microsoft Corp’s strong earnings led a rally that pulled the S&P and Dow back into the black for 2018.
Microsoft, whose strong results helped push the Nasdaq to its biggest daily gain since March just a day earlier, fell 4.7 percent.
Intel Corp defied the weakness to gain 2.5 percent after its better-than-expected quarterly results, though interim Chief Executive Officer Bob Swan said trade tensions with China could be a “headwind” next year. (Reporting by Amy Caren Daniel and Savio D’Souza in Bengaluru; Editing by Arun Koyyur and Shounak Dasgupta)