U.S. Stock-Index Futures Fall; Wachovia, JPMorgan Shares Drop

By Sarah Jones and Elizabeth Stanton

Sept. 23 (Bloomberg) -- U.S. stock-index futures fell and shares in Europe and Asia retreated as Federal Reserve Chairman Ben S. Bernanke told Congress that failure to enact a plan to rid banks of bad assets would threaten markets and the economy.

Wachovia Corp. slid 8.5 percent, JPMorgan Chase & Co. lost as much as 1.5 percent and Citigroup Inc. retreated 2.2 percent as Oppenheimer & Co. analyst Meredith Whitney cut banks' earnings estimates and said the disruption in lending has had ``underappreciated consequences.'' General Electric Co. fell 2 percent after being downgraded by Merrill Lynch & Co., which forecast slowing financial earnings. Gains in chipmakers lifted Nasdaq-100 Index futures after Deutsche Bank AG raised its price estimate on Infineon AG and analysts said Micron Technology Inc. is likely to buy rival Qimonda AG.

S&P 500 futures expiring in December lost 2.5, or 0.2 percent, to 1,211.3 at 9:14 a.m. in New York. Dow Jones Industrial Average futures slipped 8, or 0.1 percent, to 11,055. Nasdaq-100 Index futures added 13.75, 0.8 percent, to 1,683.5.

``There's still major concern that there are financial institutions, regular banks, that are on the edge, and the consumer is probably entering a significant slowdown,'' said Robert Lutts, president and chief investment officer of Cabot Money Management in Boston, which oversees $500 million. ``Standing aside and being more conservative is the right approach now.''

The Standard & Poor's 500 Index was poised to slide for a second day as analysts from Whitney to HSBC Holdings Plc. strategist Richard Cookson expressed growing doubt that the $700 billion bank bailout will revive the economy. The 3.8 percent decline yesterday erased almost half of the gains spurred last week by Treasury Secretary Henry Paulson's move to stabilize banks. Investors should reduce holdings in developed markets as the plan won't stop a ``nasty slowdown,'' Cookson's team said.

Europe, Asia

Europe's Dow Jones Stoxx 600 Index declined for a second day, falling 2.3 percent. The gauge has now erased about half of an 8.3 percent rally on Sept. 19. The MSCI Asia Pacific Index retreated 0.4 percent today, snapping a two-day advance.

Washington Mutual Inc. slumped 7.8 percent as Moody's Investors Service cut credit ratings on $8.8 billion of euro- denominated bonds.

Lawmakers have balked at rubber-stamping the $700 billion bailout proposal, with Democrats demanding support for homeowners and limits on executive pay and some Republicans questioning the plan's reach and size.

`Urgently Required'

``Action by the Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and for our economy,'' Bernanke said in testimony prepared for delivery today to the Senate Finance Committee. ``Global financial markets remain under extraordinary stress.''

Freeport-McMoran fell $1.36 to $70.97. Copper and gold dropped for the first time in three days.

Exxon Mobil Corp. slipped 43 cents to $78.37. Crude oil slid in New York for the first time in a week, paring yesterday's record gain. The contract for November delivery declined as much as $2.61 to $106.76 a barrel on the New York Mercantile Exchange.

Air Products and Chemicals Inc. lost 28 cents to $80. The maker of industrial gases cut its forecast for fourth-quarter earnings after a fire damaged a Korean plant and U.S. Hurricanes Gustav and Ike curbed demand.

The company predicts diluted profit from continuing operations will be in the range of $1.24 to $1.26 a share, down from an earlier forecast of $1.37 to $1.42.

ImClone Gains

ImClone Systems Inc. increased $2.42 to $61.82 after Bristol-Myers said it would tender $62 a share, up from $60 a share, for the 83 percent of the company it doesn't already own. Bristol-Myers lost 15 cents to $20.47.

The S&P 500 is down 18 percent this year on concern more than $500 billion in credit losses and writedowns at financial firms worldwide and a slowing economy will hurt profits. Earnings for companies in the index are forecast to fall 5 percent this quarter, according to analyst estimates compiled by Bloomberg.

A decline in third-quarter profits would make this streak of decreases the longest since the period ended in 2002, the year the benchmark index for American equities completed a 49 percent plunge from its March 2000 record. The S&P 500 has lost 23 percent since its all-time high reached in October 2007.

The S&P 500's 8.5 percent, two-day rally at the end of last week was its biggest since the aftermath of the crash of 1987. The gain followed a drop of 7.6 percent over three days that started when Lehman Brothers Holdings Inc. filed for bankruptcy, Merrill Lynch & Co. was sold to Bank of America Corp. and the U.S. took control of American International Group Inc.

`Nasty Slowdown'

While Paulson's plan to stabilize the banking system ``puts a floor -- fingers crossed -- on the worst of the downturn, it seems unlikely to be able to prevent a nasty slowdown, for the simple reason that both the financial system and the real economy will continue to deleverage,'' HSBC's Cookson wrote today.

HSBC, Europe's largest bank, cut its recommendation on developed-market equities to ``underweight'' from ``neutral.''

To contact the reporter on this story: Sarah Jones in Copenhagen at sjones35@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net.