U.S. Stock-Index Futures Gyrate on Intel, Rate-Cut Speculation

By Adam Haigh

Nov. 13 (Bloomberg) -- U.S. stock-index futures bounced between gains and losses as speculation the Federal Reserve may cut interest rates further to boost economic growth offset lower forecasts from Intel Corp. and Wal-Mart Stores Inc.

Intel, whose chips run more than three-quarters of the world's computers, sank 5.6 percent in Germany as it said demand was ``significantly weaker'' across its entire product line.

The Standard & Poor's 500 Index's three-day slump has left the benchmark for U.S. equities within 0.5 percent of a five- year low. Stocks tumbled yesterday as the Treasury's plan to use bailout funds to shore up consumer lending and Best Buy Co.'s warning of a ``seismic'' slowdown in spending yesterday stoked concern the credit crisis is far from over.

Futures on the S&P 500 expiring in December added 0.4 percent to 856.6 at 12:24 p.m. in London, after earlier falling as much as 1.4 percent. Dow Jones Industrial Average futures gained 0.3 percent to 8,304. Nasdaq-100 Index futures declined 0.3 percent to 1,159.5 on Intel's results.

``Tech is a super-cyclical sector and shows you how difficult it is in economies globally,'' said Job Curtis, a fund manager at Henderson Global Investors Ltd. in London, which has about $125 billion. ``Intel shows just how hard things are,'' he said in a Bloomberg Television interview.

Futures trading indicated a 80 percent chance that the U.S. central bank will lower interest rates by 75 basis points to 0.5 percent at its next meeting, compared with a 58 percent probability a week ago.

``The Fed is going to keep cutting rates until something happens that is positive for economic growth,'' said John Haynes, senior U.S. equity strategist at Rensburg Sheppards in London. ``They will do whatever it takes.''

Global Slump

More than $29 trillion has been erased from the value of global equity markets this year and the S&P 500 is down 42 percent as credit losses and writedowns neared $950 billion. The Organization for Economic Cooperation and Development today cut its 2009 global forecast for the second time this year and urged governments to take more measures to fight a recession.

Intel sank 5 percent to $12.76 in Germany after saying its profit margin also will fall short of an earlier prediction. The company cited ``significantly weaker'' demand across its entire product line.

National Semiconductor Corp. may be active. The maker of chips for the five largest mobile-phone manufacturers reduced its revenue forecast for the second quarter and said it will cut about 5 percent of its workforce.

Wal-Mart

Wal-Mart slid 0.5 percent to $52.34 in New York. Full-year profit will be $3.42 to $3.46 a share, the company said. It had projected $3.43 to $3.50. Analysts estimated $3.48.

The U.S. trade deficit probably narrowed in September as falling oil prices reduced the value of imports, economists said before a report today. The Commerce Department's report on trade is due at 8:30 a.m. in Washington. Estimates of the 71 economists surveyed ranged from deficits of $52.8 billion to $59 billion.

Also at 8:30 a.m., a report from the Labor Department may show 480,000 people filed initial applications for unemployment insurance last week, little changed from 481,000 a week earlier, according to the survey median. On average, 321,000 workers per week submitted claims last year.

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To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.