By Sarah Jones
Nov. 6 (Bloomberg) -- U.S. stock-index futures fell after Cisco Systems Inc. forecast the first revenue decline in five years and News Corp. cut its profit outlook, deepening concern the economic slowdown will hurt earnings.
Cisco, the world's largest maker of networking equipment, lost 7.2 percent in Germany. News Corp. sank 11 percent after the media company controlled by Rupert Murdoch cited shrinking ad sales at its Fox stations and newspapers. Wells Fargo & Co. slipped 4 percent after the bank said it plans to raise $10 billion through a stock offering.
Futures suggested the Standard & Poor's 500 Index will extend yesterday's 5.3 percent decline, the biggest drop following a presidential election. The benchmark, which rebound as much as 18 percent from a year low on Oct. 27, is still down 35 percent this year, the steepest annual retreat since 1937.
``The economic picture looks to be worsening,'' said Nick Skiming, who helps oversee about $2 billion at Ashburton Ltd. in Jersey, Channel Islands. Companies are ``confirming that. The broader slowdown that we have all been worried about is spreading across different sectors.''
S&P 500 futures expiring in December fell 1.3 percent to 954.8 as of 12:08 p.m. in London after earlier dropping as much as 2.3 percent. Dow Jones Industrial Average futures retreated 1.7 percent to 9,024 and Nasdaq-100 Index futures slumped 1.8 percent to 1,282.25. Stocks in Europe and Asia also declined.
Futures pared losses after the Bank of England unexpectedly cut the benchmark interest rate by 1.5 percentage points to 3 percent, trying to contain the damage caused by a recession.
Interest Rates
Switzerland's central bank lowered its benchmark rate by 50 basis points today, while the European Central Bank is also expected to reduce borrowing costs.
Reports on jobs and service industries yesterday stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.
Government data today may show first-time claims for unemployment benefits remained near a five-year high at 477,000 last week. The figures come a day before payrolls figures which will probably show U.S. employers eliminated Jobs in October for a 10th consecutive month.
Earnings at companies in the S&P 500 that have reported third-quarter results fell 7.2 percent on average, Bloomberg data show. Analysts expect full-year profits to drop 7.7 percent, according to estimates complied by Bloomberg.
Cisco, News Corp.
Cisco declined 7.2 percent to $16.13 in Germany. Chief Executive Officer John Chambers said sales will drop as much as 10 percent in the second quarter because of the financial crisis. In August, Chambers predicted an advance of 8.5 percent from a year earlier.
News Corp.'s Class A shares tumbled 11 percent to $8.83 in Germany after the shares slid as much as 22 percent in Sydney. Fiscal 2009 profit will drop in the ``low to mid teens'' in percentage terms, the company said after previously forecasting a gain of 4 percent to 6 percent.
Wells Fargo fell 4 percent to $30.41 in Germany after the biggest bank on the U.S. West Coast said it plans to sell stock to fund the purchase of Wachovia Corp. The bank also said losses from the acquisition will be less than previously expected.
The bank, which disclosed the share offering yesterday in a statement, had said it would raise as much as $20 billion to fund the deal. That was before the Treasury said it was buying $25 billion of Wells Fargo's preferred shares.
General Motors Corp. and Ford Motor Co. may decline. Toyota Motor Corp., the world's second-biggest carmaker, forecast the biggest drop in profit in at least 18 years as a global slump cripples auto demand and gains in the yen erode the value of overseas sales.
To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.
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