U.S. Stock Futures Decline; Medtronic, Kellogg Drop in Europe

By Adria Cimino

Nov. 18 (Bloomberg) -- U.S. stock futures fell, pointing to a third straight day of losses for the Standard & Poor's 500 Index, as concern deepened that the global economic slump will hurt earnings.

Medtronic Inc. slipped 1 percent in German trading before reporting results today. Kellogg Co., the biggest U.S. cereal maker, retreated 1.4 percent as UBS AG cut its recommendation on the shares, citing ``consumer weakness in key economies.'' Yahoo! Inc. jumped 16 percent after Chief Executive Officer Jerry Yang agreed to step down, opening the door for a fresh bid from Microsoft Corp.

Futures on the S&P 500 Index expiring in December lost 2 percent to 834.1 as of 6:57 a.m. in New York. Dow Jones Industrial Average futures slid 1.6 percent to 8,131 and Nasdaq- 100 Index futures sank 2.2 percent to 1,132.5.

``The market remains volatile,'' said Chicuong Dang, an equity analyst at KBL Richelieu Gestion in Paris, which oversees about $5.1 billion. ``Earnings are disappointing. We lack visibility on 2009. There are still worries of a recession that will be stronger than expected. Today, we'll be looking at the inflation statistics,'' he told Bloomberg Television.

U.S. stocks yesterday tumbled for a second day as a record contraction in New York manufacturing and Citigroup Inc.'s plan to cut 52,000 jobs spurred concern the recession will deepen. The S&P 500 is down 42 percent so far this year as credit losses and writedowns at financial firms worldwide topped $960 billion. That would be the gauge's steepest annual decline since 1931.

Earnings Watch

Profits slumped 17 percent on average at companies in the S&P 500 that have reported third-quarter results, according to Bloomberg data. Analysts expect an 8.5 percent drop in full-year earnings, based on estimates compiled by Bloomberg.

Medtronic retreated 1 percent to $36.07 in Germany before reporting earnings.

Home Depot Inc., the world's largest home-improvement retailer, said third-quarter profit declined as the U.S. housing slump slowed demand for remodeling projects. Net income of 45 cents a share beat analysts' estimates. The stock added 2.5 percent in early New York trading.

Prices paid to U.S. producers probably fell in October by the most on record as weakening global growth caused demand for commodities to dry up, economists said before a report today. The Labor Department figures are due at 8:30 a.m. New York time.

Kellogg lost 1.4 percent to $45.65 in Germany. The shares were downgraded to ``neutral'' from ``buy'' at UBS, which cited ``consumer weakness in key economies, combined with local currency weakness against the U.S. dollar.''

Yahoo, Electronic Arts

Yahoo jumped 16 percent to $12.38. The shares climbed 4.4 percent yesterday in late trading as investors speculated a new CEO may broker an acquisition by Microsoft or a combination with another suitor.

The company's market value has dropped by more than $20 billion since Yang took over as CEO in June 2007 as discussions with Microsoft ended in failure, an ad partnership with Google Inc. was derailed and talks with Time Warner Inc.'s AOL stalled. Yahoo ``might be worth $21'' a share to an acquirer, Goldman Sachs Group Inc. said.

Electronics Arts Inc. fell 1.7 percent to $18.98 in Germany. The second-largest U.S. video-games publisher filed a statement with regulators indicating it may seek to raise capital.

General Motors Corp., asking for U.S. financial aid because it's running out of money, added 1.3 percent to $3.22 in Germany. U.S. auto chief executives planned to renew their personal push today for $25 billion in loans to stem cash shortages, as details of the aid package circulated on Capitol Hill and Senate approval this week remained in doubt.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.