Stock markets slip as U.S. growth slows and tariff decision nears

U.S. GDP grew at a 1.4% annualized rate in the fourth quarter, below expectations, while the Federal Reserve’s preferred inflation gauge (PCE) rose 0.4% in December; markets traded lower as investors awaited a possible U.S. Supreme Court ruling on tariffs.

Wall Street was set to open lower after government data showed U.S. economic growth slowed in the fourth quarter and underlying inflation ticked up in December. The GDP advance estimate and the Personal Consumption Expenditures price index moved investor attention toward how the Federal Reserve may time future rate changes. At the same time, markets were watching for a possible U.S. Supreme Court decision on tariffs that could have fiscal implications. S&P Global business activity and University of Michigan consumer sentiment readings were also due later in the day. Key points: - U.S. gross domestic product rose at a 1.4 per cent annualized rate in the fourth quarter, below economists' expectations. - The Personal Consumption Expenditures index, the Federal Reserve's preferred inflation gauge, rose 0.4 per cent in December, a larger monthly increase than forecast. - Markets were trading lower in premarket activity, with major U.S. index futures reported down. - A possible U.S. Supreme Court ruling on President Trump's tariffs was expected at 10:00 a.m. eastern; Penn-Wharton Budget Model economists reported that more than US$175 billion in tariff collections could need to be refunded if the tariffs are struck down. Summary: The data combined slower-than-expected GDP growth with a stronger-than-expected reading on underlying inflation, and markets reacted by moving lower. Investors were also awaiting a potential Supreme Court decision on tariffs and additional economic reports due later in the day, which could influence market direction in coming sessions.