U.S. futures sharply lower as data still weighs; Dow Jones down 1.07%

U.S. stock futures pointed to a sharply lower open on Friday, ahead of fresh earnings reports, while the Thursday's downbeat U.S. economic reports continued to weigh on equity markets.

Ahead of the open, the Dow Jones Industrial Average futures pointed to a 1.07% drop, S&P 500 futures signaled a 0.89% decline, while the Nasdaq 100 futures indicated a 0.38% slide.

Investors remained cautious after data on Thursday showed that initial jobless claims rose in line with expectations last week, but the number of continuing jobless claims remained above the three million mark for the second successive week.

In addition, U.S. factory output fell to a three-month low in January, due to disruption from unseasonable cold weather.

The U.S. manufacturing PMI declined to 53.7 this month from a final reading of 55.0 in December. Analysts had expected the index to hold steady.

The tech sector was expected to be active, after Microsoft said revenue climbed 14% to a record USD24.5 billion in the fiscal second quarter, which ended December 31, beating market estimates and sending shares up 3.43% in pre-market trade.

Qualcomm dropped 0.49% in early trading however, after saying it bought a portfolio of patents from Hewlett-Packard. HP shares edged down 0.07% in extended trading.

Apple shares dropped 0.68% pre-market, even as billionaire investor Carl Icahn said he increased his stake in the tech giant by another USD500 million, bringing his total holdings in the iPhone maker to about USD3.6 billion.

In the financial sector, Morgan Stanley added 0.13% in early trading amid reports Chairman and Chief Executive Officer James Gorman’s compensation package for last year includes a USD5.06 million stock bonus which is almost double his 2012 equity award.

Other stocks likely to be in focus included Procter & Gamble, Bristol-Myers Squibb, Honeywell, Kimberly-Clark and Xerox, scheduled to report quarterly results later in the day.

Across the Atlantic, European stock markets were sharply lower. The EURO STOXX 50 retreated 1.24%, France’s CAC 40 dropped 0.95, Germany's DAX slid 0.73%, while Britain's FTSE 100 declined 0.62%.

During the Asian trading session, Hong Kong's Hang Seng Index tumbled 1.25%, while Japan’s Nikkei 225 Index plunged 1.94%.