U.S. Stock Futures Gain After Jobs Report; Nvidia Shares Rise

By Sarah Jones

Nov. 7 (Bloomberg) -- U.S. stock-index futures gained after employers cut more jobs than forecast last month and the unemployment rate rose, spurring speculation the Federal Reserve will lower interest rates.

Home Depot Inc. advanced in Germany as futures traders bet the Federal Reserve will cut borrowing costs by half a percentage point to 0.5 percent at its next meeting. Nvidia Corp. jumped 14 percent on better-than-estimated earnings.

Standard & Poor’s 500 Index futures expiring in December added 0.5 percent to 909.3 as of 8:33 a.m. in New York, indicating the measure will pare yesterday’s 5 percent drop. Dow Jones Industrial Average futures gained 0.4 percent to 8,736 and Nasdaq-100 Index futures increased 1.4 percent to 1,258. Stocks in Europe also climbed, while Asian shares declined.

The U.S. jobless rate climbed in October to the highest level since 1994 and payrolls dropped by 240,000 workers, signaling the economic slump inherited by Barack Obama will last well into his first year as president.

The unemployment rate rose to 6.5 percent from 6.1 percent the previous month, the Labor Department reported today in Washington. The job cuts exceeded forecasts and followed a revised loss of 284,000 in September, bringing the two-month decline in payrolls to more than half a million.

The S&P 500’s two-day tumble wiped out more than half of the index’s rebound from a five-year low on Oct. 27. The measure is down 38 percent in 2008 on concern almost $700 billion in credit losses and writedowns at financial firms worldwide will push the global economy into recession, hurting the outlook for earnings. Analysts expect full-year profits at companies in the index to drop 7.7 percent, according to estimates complied by Bloomberg.

$6 Trillion

More than $6 trillion has been erased from U.S. equity markets this year. Banks led the drop, losing 52 percent as a group, followed by commodities producers and computer companies.

Economists Stephen Roach at Morgan Stanley and Neal Soss of Credit Suisse say this year’s contraction was under way in March. Harvard University economist Martin Feldstein, a member of the National Bureau of Economic Research, said that month that a recession had probably started in the U.S. The group is responsible for dating business cycles in the U.S.

The U.S. economy shrank for first time since 2001 a year ago after the drop in U.S. housing prices froze credit markets globally. President George W. Bush to authorized more than $1 trillion in spending to bail out banks.

The S&P 500 closed yesterday at a price that is 19.9 times the average earnings of its companies in the last 12 months. That’s 20 percent more expensive than its lowest level of the decade, 16.6 times earnings in July 2006.

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net;