Futures point to lower open after weak GDP report

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stock index futures pointed to a lower open on Wednesday as the latest economic data came in below expectations, giving investors further reasons to take profits amid ongoing tension in Iraq.

The U.S. economy contracted 2.9 percent in the first quarter, a much steeper pace than previously estimated, though activity was impacted by harsh winter weather and there are indications that growth has since rebounded. In another negative data point, orders for durable goods unexpectedly fell 1 percent in May, compared with the expectation for flat activity.

While recent data has indicated second quarter economic activity has rebounded, the weak indicators could give investors further reason for caution, especially with major indexes near record levels.

The S&P 500 hit an intraday record on Tuesday, but enthusiasm waned in the final hours of trading as concerns over Iraq returned to the forefront. The Dow posted its biggest daily decline in over a month.

S&P 500 e-mini futures fell 4.25 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average e-mini futures sank 41 points and Nasdaq 100 e-mini futures lost 8.75 point.

Militants in Iraq attacked one of the country's largest air bases. The first U.S. teams arrived to assess Iraqi security forces and decide how to help counter the violence.

Investors are concerned the impact prolonged turmoil in Iraq could have on oil prices, which are already up 3.8 percent this month. U.S. crude futures rose 0.3 percent to $106.29 per barrel in early trading. Analysts have speculated that prices above $115 per barrel for an extended period will weigh on economic activity.

The CBOE Volatility index spiked more than 10 percent on Tuesday, coinciding with the market's pivot lower, the biggest one-day pop for the "fear index" since April. Still, at 12.13 the VIX remains at very low levels on a historical basis.

Monsanto Co rose 5.7 percent to $127.45 in premarket trading after its results while General Mills Inc fell 2.8 percent to $52.18 as its fourth-quarter earnings missed expectations.

Medical Action Industries jumped 94 percent to $13.72 in heavy premarket trading after Owens & Minor Inc agreed to buy the company for about $208 million.

Bristol-Myers Squibb Co rose 1.9 percent to $49.23 a day after saying said a late-stage trial testing its immunotherapy nivolumab in advanced melanoma patients was halted early after it was determined that the drug was likely to prolong survival.

(Editing by Chizu Nomiyama and Nick Zieminski)