U.S. stock futures fell early Friday after the government said that the economy grew at a dismal 1 percent annual pace this spring, slower than previously estimated. The downward revision is likely to add to handwringing over the potential of another recession.
Nine of the past 11 recessions since World War II have been preceded by a period of growth of 1 percent or less.
Still, trading remained within a narrow range as Wall Street waiting on a major speech from Federal Reserve Chairman Ben Bernanke at 10 a.m. Bernanke is expected to outline the Fed's view of the economy and its options for keeping a fragile recovery on track.
Many investors hope Bernanke will outline new measures to boost the flagging economy. The Fed has already pledged to keep short-term interest rates low until mid-2013. Low rates make higher-risk bets such as stocks more attractive.
At last year's conference in Jackson Hole, Wyo., Bernanke signaled that the central bank would buy more government bonds to lower long-term interest rates. Stocks rose steadily during the period when the Fed bought up $600 billion of Treasurys.
"All of the trading today is going to be centered on the chairman's comments, and I'm a little fearful that there are a lot of expectations built in that I don't think Bernanke can deliver on," said Jack Ablin, chief investment officer at Harris Private Bank.
Ablin said most of the market's gains this week were likely fueled by optimism that Bernanke would unveil a plan. That means the market could drop by the same amount — about 3 percent — after the speech.
The government lowered its estimate for economic growth in the April-June quarter from 1.3 percent Friday because of fewer exports and weaker growth in business stockpiles. That means the economy expanded only 0.7 percent in the first six months of the year — its worst pace since the recession ended in June 2009.
Before the markets opened, Dow Jones industrial average futures fell 76 points, or 0.7 percent, to 11,055. Standard & Poor's 500 futures lost 9, or 0.8 percent, to 1,148. Nasdaq 100 futures declined 14, or 0.7 percent, to 2,097.
Stocks fell sharply on Thursday, ending a three-day rally. The Dow Jones industrial average closed down 170.89 points, or 1.5 percent, to close at 11,149.82.
A plunge in Germany's main index, the DAX, weighed on markets for most of the day, though the reasons for a 4 percent nosedive in just 15 minutes remain unclear.
Financial shares in the U.S. rose, however, after Warren Buffett said he would invest $5 billion in Bank of America Corp. The Bank's shares jumped 9 percent. Bank of America has lost half of its value this year with investors spooked about its exposure to shoddy mortgages that it bundled and sold.
Major U.S. stock indexes are still up more than 3 percent for the week.
The market's quick reversals this week were driven in part by speculation about Bernanke's speech, with investors divided over whether he will announce new support for the U.S economy.
Money sloshed back toward bonds on Friday, pushing Treasury yields lower. Some traders expect that disappointment over Bernanke's speech will spark a quick sell-off in stocks, further depressing yields. The yield on the 10-year Treasury note fell to 2.18 percent from 2.24 percent late Thursday. Bond yields fall as their prices rise.
Demand for Treasurys has been strong in part because of instability in Europe. In the past year, a sovereign-debt crisis in Greece has weighed on continents' economic power houses, Germany and France.
Germany has balked at proposals to bulk up bailout efforts for Greece, Portugal and Ireland. A group led by Finland is demanding collateral on the bailout loans to Greece, which threatens all of the countries that use the euro.
Greek bonds have fallen to record lows this week on fears that the bailout will fall apart and the nation will default.
Asian markets closed mixed. Major markets in Europe fell more than 1 percent. Germany's DAX is down about 2.3 percent.