By Adria Cimino and Elizabeth Stanton
Sept. 11 (Bloomberg) -- U.S. stock-index futures tumbled as concern grew that Lehman Brothers Holdings Inc. will fail to shore up capital, heightening concern about the stability of the banking system.
Lehman, which lost more than half its value in the past three days, tumbled another 45 percent in trading before the open of exchanges after Citigroup Inc. and Goldman Sachs Group Inc. cut their recommendations on the securities firm. Chesapeake Energy Corp. and Petrohawk Energy Corp. tumbled about 2 percent and led oil and gas drillers lower as crude fell for a third day after a stronger dollar reduced the appeal of commodities as a hedge. Futures extended declines on a government report showing jobless claims topped economists' forecasts.
``People are at the edge of their seats and reacting and overreacting to every piece of news, because there are no trends except for the uncertainty about the circumstances with banks,'' Laszlo Birinyi, who oversees more than $350 million as president of Birinyi Associates Inc. in Westport, Connecticut, told Bloomberg Television. ``It seems to be waiting for the other shoe to drop but this is like a centipede that has a hundred shoes and it just doesn't seem to ever want to end.''
Standard & Poor's 500 Index futures expiring this month sank 18.1, or 1.5 percent, to 1,215.2 as of 8:39 a.m. in New York. Dow Jones Industrial Average futures decreased 136 to 11,155 and Nasdaq-100 Index futures fell 22.75 to 1,714.75.
Futures indicated the S&P 500 may fall below its lowest close of the year. The benchmark index for U.S. equities is poised for its first annual decline since 2002 as more than $500 billion in credit losses and asset writedowns at financial firms worldwide and slowing economic growth damp the outlook for earnings.
`Bear Case' for Lehman
Lehman declined $3.23 to $4. The shares were downgraded to ``hold'' from ``buy'' at Citigroup, which cited a possible cut in the credit rating and deteriorating capital. Lehman's initiatives to boost capital ``fell short of what was necessary to lessen the bear case on the stock,'' Goldman analysts including New York- based William Tanona said in a note to clients.
Oppenheimer & Co. analyst Meredith Whitney lowered her full- year earnings estimate for Lehman, saying the bank faces further writedowns after posting the biggest loss in its 158-year history yesterday. Whitney said Lehman may have an annual per-share loss of $10.24, compared with an earlier forecast of a $6.67 loss.
Crude Oil
Petrohawk energy slumped 52 cents to $23.02, while Chesapeake declined 90 cents to $39.25.
Crude oil for October delivery sank as much as 1.1 percent to $101.43 on the New York Mercantile Exchange as the dollar rose to a one-year high against the euro, reducing the appeal of commodities as a hedge.
Actel Corp. dropped 5 percent to $10.74 in after-hours trading in New York. The maker of electronic equipment said revenue may fall as much as 9 percent from the second quarter. The company had previously predicted growth of as much as 1 percent.
First-time jobless claims fell to 445,000 in the week ended Sept. 6 from a revised 451,000 the prior week that was more than initially reported. Economists surveyed by Bloomberg had forecast 440,000 new claims. The number of people staying on rolls rose 122,000 to 3.525 million, the highest since October 2003.
The U.S. trade deficit widened more than forecast in July as oil imports soared to a record, overshadowing gains in exports. The gap grew 5.7 percent to $62.2 billion, the largest in 16 months, from a revised $58.8 billion in June that was bigger than previously estimated, the Commerce Department said. Total imports and exports were the highest ever.
U.S. stocks advanced yesterday as investors snapped up energy shares trading at their cheapest level in 18 months, while better-than-forecast earnings at FedEx Corp. buoyed industrial companies.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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