U.S. Stock-Index Futures Fall; Freddie Mac, Whole Foods Drop

By Adam Haigh and Elizabeth Stanton

Aug. 6 (Bloomberg) -- U.S. stock-index futures declined as Freddie Mac's dividend cut and disappointing forecasts from Whole Foods Market Inc. and Priceline.com Inc. overshadowed better-than-estimated earnings at Cisco Systems Inc.

Freddie Mac dropped after the second-largest U.S. mortgage- finance company posted its fourth straight quarterly loss and said it will reduce its payout by at least 80 percent. Whole Foods, the largest U.S. natural-foods grocer, slumped on an annual earnings forecast that trailed projections. Cisco spurred gains in Nasdaq-100 Index futures as its forecast eased concern that demand for computer networking equipment is deteriorating.

Futures on the Standard & Poor's 500 Index expiring in September lost 2.7, or 0.2 percent, to 1,280.2 at 8:05 a.m. in New York, indicating the benchmark index for U.S. equities may retreat following its biggest gain in four months. Dow Jones Industrial Average futures lost 31 to 11,554. Nasdaq-100 futures climbed 5.5 to 1,874.5.

More than three-quarters of the S&P 500 companies that have reported second-quarter earnings exceeded or matched analysts' estimates, according to data compiled by Bloomberg. Still, profits at the 409 companies that released results through yesterday were down 19 percent from a year earlier.

U.S. stocks yesterday jumped the most since April as crude oil fell to a three-month low and the Federal Reserve indicated it won't lift interest rates until next year. The central bank left borrowing costs unchanged at 2 percent and predicted inflation will ease. Shares in Europe and Asia climbed today.

Freddie Mac

Freddie Mac tumbled 13 percent to $7 in pre-market trading. The company's second-quarter net loss of $821 million, or $1.63 a share, compares with the 54-cent-a-share average loss estimate of nine analysts in a Bloomberg survey. Freddie Mac said its dividend will be reduced to 5 cents from 25 cents.

Freddie Mac has plunged 76 percent this year on concern the company may not have enough capital to overcome loan delinquencies on the $2.2 trillion of mortgages it owns and guarantees. The concerns prompted U.S. Treasury Secretary Henry Paulson to shore up Freddie Mac and the larger Fannie Mae. Freddie Mac Chief Executive Officer Richard Syron, 64, committed to raise $5.5 billion in equity, though failed to complete the sale as the stock slumped.

Whole Foods

Whole Foods retreated 16 percent to $19.19. Net income dropped 31 percent to $33.9 million, or 24 cents a share, on costs from last year's purchase of Wild Oats Markets Inc. The grocer said it's reducing the number of planned store openings for the year ending in September 2009 to 15, from the 25 to 30 announced in May.

Priceline.com slumped 21 percent to $96.38 in Germany. Gross travel bookings will rise no more than 54 percent in the third quarter, less than the 71 percent increase in the second quarter, the company said.

Cisco climbed 4.6 percent to $23.70 in trading before U.S. exchanges opened. Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, the company said.

Amkor Technology Inc. may advance. The world's second- largest computer-chip packager said second-quarter profit climbed for the seventh consecutive period on gains from the sale of real estate and foreign currency fluctuations. The stock didn't trade in Europe.

American International Group Inc., the world's biggest insurer and one of the 30 companies in the Dow Jones Industrial Average, is scheduled to report earnings after the market closes today.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.