U.S. Stock Futures Retreat; Palm and Intrepid Potash Decline

By Daniela Silberstein

Dec. 19 (Bloomberg) -- U.S. stock futures fell as results from Palm Inc. and Intrepid Potash Inc. dimmed the earnings outlook for technology and raw-material companies, while Citigroup Inc. dropped after its debt was lower by Moody’s.

Palm slid 9 percent in Germany after reporting a sixth straight loss. Intrepid Potash, the largest producer of the crop nutrient in the U.S., sank 20 percent after saying its sales in the fourth quarter will be less than half what it booked in the previous three months. Citigroup retreated 1.2 percent after having its senior debt rating cut two grades by Moody’s.

The Standard & Poor’s 500 Index yesterday trimmed its weekly advance to 0.6 percent as a deteriorating credit outlook for General Electric Co. spurred concern the financial crisis is worsening. The gauge has posted its biggest drop since 1931 this year as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and the U.S., Europe, and Japan entered the first simultaneous recessions since World War II.

“We’ve seen synchronic recession of all industrial nations over the last few months,” said Marco Huwiler, strategist at Clariden Leu in Zurich, which manages the equivalent of $120 billion. “The current quarter and the outlook for the next one are looking bleak, we’ll see a further contraction.”

Futures on the S&P 500 expiring in March fell 0.8 percent to 885.1 at 12:33 p.m. in London. Dow Jones Industrial Average futures lost 0.8 percent to 8,610. Nasdaq-100 Index futures decreased 1.1 percent to 1,212.

Fed Rates

The S&P 500 has dropped every day this week except Dec. 16, when the Federal Reserve cut its benchmark interest rate to a record low and said it will employ “all available tools” to revive the economy. Speculation that President-elect Barack Obama will also step up efforts to revive growth has helped push the index up 18 percent from an 11-year low on Nov. 20.

Earnings for S&P 500 companies are expected to fall about 14 percent this year, compared with 6.6 percent growth forecast six months ago, data compiled by Bloomberg show.

Palm dropped 9 percent to $2 in Germany. The company posted a second-quarter net loss of $4.64 a share as taxes rose and its Treo and Centro phones faced mounting competition from Research In Motion Ltd.’s BlackBerry and Apple Inc.’s iPhone.

Research In Motion gained 0.4 percent to $38.60. The smart- phone maker forecast sales of $3.3 billion to $3.5 billion for the current quarter. That topped the average analyst estimate of $3 billion in a Bloomberg survey.

Oracle, Banks

Oracle Corp., the world’s second-largest software maker, met analysts’ estimates with its second-quarter profit and third-quarter forecast as support contracts made up for slumping orders of new programs. The shares were little changed in Europe.

Intrepid Potash plunged 20 percent to $16.11 in Europe. The Denver-based company’s shares have already lost 60 percent this year in New York trading.

Citigroup fell 1.2 percent to $7.34. The bank’s senior debt was cut to A2 from Aa3 by Moody’s, which cited the company’s “weakened earnings prospects.” Separately, S&P cut ratings or outlooks on 12 financial companies because of increased risks for the whole banking industry.

Goldman Sachs Group Inc. declined 1.6 percent to $78.75. The bank that reported its first quarterly loss earlier this week is among the 12 companies.

General Motors Corp. climbed 6 percent to $3.88. The largest U.S. automaker and Chrysler LLC would get U.S. loans to stay afloat until March under a Bush administration rescue plan that may be unveiled as soon as today, people familiar with the talks said. The companies have said they need $14 billion to stay in business through March and are temporarily idling plants to trim expenses.

Ford Motor Co., the second-biggest U.S. automaker, added 2.8 percent, to $2.92.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.