NEW YORK (REUTERS) - U.S. stocks opened lower on Thursday after data showed that the U.S. economy grew at a slower-than-expected pace in the second quarter even as the Federal Reserve left doors open for a possible rate hike in September.
Gross domestic product expanded at a 2.3 per cent annual rate, the Commerce Department said, but economists had expected a 2.6 per cent rise.
The numbers come a day after the Fed said the U.S. economy and job market continue to strengthen.
The Fed has maintained near-zero interest rates for nearly a decade, saying it will raise rates only when it sees a sustained recovery in the economy.
"There is a disconnect between what the Main Street is seeing and what the Fed is telling us," said Adam Sarhan, chief executive of Sarhan Capital. "If the economy isn't meeting expectations at near zero percent interest rates, then how is it going to grow when the Fed does raise rates? The numbers are a direct contradiction to what the Fed is telling us."
Adding to the pressure, the number of Americans filing new applications for unemployment benefits increased last week but remained near cycle lows.
U.S. stocks closed stronger on Wednesday after the Fed statement. The S&P 500 has bounced about 2 percent higher in the past two days following a near-3 percent drop over the preceding week that had been caused in part by a rout in China's stock markets.
At 9:45 a.m. ET (945 pm Singapore time), the Dow Jones industrial average was down 79.2 points, or 0.45 per cent, at 17,672.19, the S&P 500 was down 10.21 points, or 0.48 per cent, at 2,098.36 and the Nasdaq Composite was down 24.15 points, or 0.47 per cent, at 5,087.58.
Nine of the 10 major S&P sectors were lower with the consumer staples index's 0.61 percent fall leading the decliners.
Procter & Gamble's 3.2 per cent fall dragged down the Dow, after the company reported its sixth straight fall in quarterly sales.
Facebook shares fell 2.5 per cent to US$94.50 after the social media company's quarterly profit fell due to higher costs and weighed heavily on the tech-heavy Nasdaq.
More than halfway through the second-quarter earnings season, analysts expect overall earnings of S&P 500 companies to edge up 0.8 percent and revenue to decline 3.9 percent, according to Thomson Reuters data.
While earnings are expected to increase this quarter, valuations remain a concern. The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
Companies scheduled to report during the day include Expedia, LinkedIn and Western Union after the close.