U.S. Stock Futures Decline After GM Reports $15.5 Billion Loss

By Henrietta Rumberger

Aug. 1 (Bloomberg) -- U.S. stock-index futures declined as General Motors Corp. posted a $15.5 billion loss and investors speculated reports on employment and manufacturing will show the economy is slipping into a recession.

Standard & Poor's 500 Index futures erased an earlier gain of as much as 0.4 percent after GM's results. Bayerische Motoren Werke AG, the world's largest maker of luxury cars, also said business conditions ``deteriorated sharply over the past weeks.''

``GM's earnings confirmed what we saw this morning with BMW,'' said Alexander Tavernaro, a Frankfurt-based money manager at Invesco Asset Management, which oversees about $481 billion. ``The whole sector is having difficulties.''

The S&P 500 has added 0.8 percent this week as the majority of its companies announcing second-quarter earnings beat analysts' estimates and oil capped its biggest monthly decline since 2004. Today's economic reports will come after data yesterday showed second-quarter growth trailed forecasts and jobless claims rose to a five-year high.

Futures on the S&P 500 expiring in September fell 3.1, or 0.2 percent, to 1,264 as of 12:27 p.m. in London. Dow Jones Industrial Average futures lost 20 to 11,339 and Nasdaq-100 Index futures slid 4 to 1,849.75.

The S&P 500 yesterday trimmed its rebound from an almost three-year low on July 15 to 4.3 percent. The 448,000 increase in jobless claims weighed on stocks as investors await today's report from the Labor Department at 8:30 a.m. in Washington.

Jobs Report

Payrolls fell by 75,000 after a 62,000 decline in June, according to the median estimate of economists surveyed by Bloomberg News. The jobless rate probably rose to 5.6 percent, the highest level in four years, according to the survey median.

A private report at 10 a.m. may show manufacturing shrank in July for the sixth time in eight months. The Institute for Supply Management's factory index fell to 49 from 50.2 in June, according to the Bloomberg survey median. A reading of 50 divides growth from contraction.

GM declined 73 cents to $10.34. The largest U.S. automaker reported a second-quarter loss because of strains from truck leases, costs from labor disputes and plunging U.S. sales.

The deficit of $27.33 a share marks GM's fourth straight quarterly loss and compares with a profit of $891 million, or $1.56, a year earlier. Sales fell 18 percent to $38.2 billion, the Detroit-based automaker said in a statement today.

BMW, the world's largest maker of luxury vehicles, said rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult'' and abandoned its profit forecast.

The Munich-based automaker also reported second-quarter earnings that trailed analysts' estimates.

Profit Results

Even though the majority of its companies have beaten estimates, S&P 500 profit growth in the second quarter has slumped 17 percent on average from a year earlier, according to data compiled by Bloomberg.

Biogen lost $14.25 to $55.51 in Germany. The world's largest maker of multiple sclerosis drugs and Elan Corp. said two cases of a deadly brain infection have been confirmed in patients taking the multiple sclerosis drug Tysabri, the first since the drug was reintroduced in the U.S. in 2006.

NYSE Euronext rose 42 cents to $47.66 in Germany. The world's largest owner of stock exchanges said second-quarter profit rose 21 percent, helped by record trading at its European markets.

To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net