U.S. Stock Futures Fall as Data Points to Deepening Recession

By Elizabeth Stanton

Nov. 26 (Bloomberg) -- U.S. stock futures tumbled, indicating the Standard & Poor’s 500 Index may snap a three-day advance, after orders for durable goods fell twice as much as forecast and consumer spending declined the most since 2001.

Caterpillar Inc., General Motors Corp. and Boeing Co. led declines in Dow Jones Industrial Average stocks trading in Europe after the government reported a 6.2 decrease in bookings of goods meant to last several years, the biggest drop in two years. Home Depot Inc. lost 3.3 percent and McDonald’s Corp. slipped 2.1 percent after the Commerce Department said purchases shrank by 1 percent last month.

“The reality is 2009 is pretty much set up to be a rough year economically,” Hayes Miller, head of the North American investment team at Baring Asset Management, told Bloomberg Television. Baring Asset Management oversees $39 billion.

Futures on the S&P 500 expiring in December lost 1.8 percent to 838.1 at 8:47 a.m. in New York. Dow Jones Industrial Average futures fell 1.4 percent to 8,330, while Nasdaq-100 Index futures slipped 0.5 percent to 1,129.75.

The S&P 500 yesterday climbed for a third day after the deepening recession prompted the Federal Reserve to commit as much as $800 billion to help resuscitate lending to homeowners, consumers and businesses. The index swung between gains and losses more than 20 times before closing 0.7 percent higher.

2008 Tumble

The index has tumbled 42 percent this year as credit- related losses and writedowns at financial companies worldwide approached $1 trillion, threatening global economic growth.

China’s central bank slashed its key lending rate by the most in 11 years today, extending efforts to prevent an economic slump less than three weeks after unveiling a 4 trillion-yuan ($586 billion) stimulus plan.

U.S. President-elect Barack Obama and Timothy Geithner, his choice for Treasury Secretary, are going to take over an economy that will shrink 2.05 percent this quarter, based on a Bloomberg survey of banks and securities companies. That would be the largest contraction in almost two decades.

Stock dividends are disappearing at the fastest rate in 50 years as the global credit crunch forces 91 U.S. companies led by Citigroup Inc., Genworth Financial Inc. and New York Times Co. to conserve cash, according to data compiled by Standard & Poor’s.

Capital ratios at Citigroup Inc. and other U.S. banks will fall and the government’s cash injections just “plug holes” in the companies’ balance sheets, Oppenheimer & Co.’s Meredith Whitney said in a Bloomberg Television interview.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net