By Adria Cimino
Dec. 12 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may extend its weekly decline, as the Senate’s rejection of a $14 billion plan to rescue automakers deepened concern the country is facing a prolonged recession.
General Motors Corp., the biggest U.S. carmaker, plunged 38 percent in Europe and Ford Motor Co. slid 13 percent. The Senate’s decision ends congressional efforts to aid GM and Chrysler LLC, which may run out of cash early next year. Wal-Mart Stores Inc. slipped 1.6 percent before a report that might show retail sales dropped in November for a fifth straight month as a deteriorating labor market caused consumers to retrench.
Futures on the S&P 500 expiring in March sank 4.7 percent to 833.1 as of 11:21 a.m. in London. The index has lost 0.3 percent this week. Dow Jones Industrial Average futures fell 3.8 percent to 8,245 and Nasdaq-100 Index futures decreased 4.1 percent to 1,141.75. Shares in Asia and Europe tumbled.
“We’re in a crisis without precedent and there’s a lot of turbulence still to come,” said Charles Dautresme, a strategist at Axa Investment Managers in Paris, which oversees about $770 billion. Automakers “are big employers. That’s the problem. This isn’t helping the market,” he said.
Europe’s Dow Jones Stoxx 600 Index slid 4.7 percent and the MSCI Asia Pacific Index lost 3.8 percent, snapping five days of gains. The dollar slumped below 90 yen for the first time in 13 years, while Treasuries rallied, sending yields to record lows.
Jobless Claims
U.S. stocks yesterday declined the most in five days as the Labor Department reported a bigger-than-estimated increase in initial jobless claims last week to the highest level since November 1982.
The S&P 500 earlier this week had marked a technical end to a 14-month bear market, extending its rebound from an 11-year low last month to as much as 21 percent, as President-elect Barack Obama stepped up efforts to pull the economy out of a recession.
The measure is on course for a 41 percent loss this year, the steepest such slump since 1931, as writedowns and credit losses neared $1 trillion amid the worsening financial crisis.
GM plunged 38 percent to $2.57 in Germany while Ford, the second-largest carmaker in the U.S., tumbled 13 percent to $2.52. Deutsche Bank AG lowered its recommendation for Ford to “sell.”
The brokerage also downgraded Lear Corp., the world’s second-biggest maker of automotive seats, to “sell.” The stock slid 3.1 percent to $1.87 in Germany.
The Senate thwarted the bailout plan when a bid to cut off debate on the bill the House passed yesterday fell short of the required 60 votes. The Bush administration will “evaluate our options in light of the breakdown in Congress,” spokesman Tony Fratto said.
‘Chain Reaction’
“There will be a chain reaction” throughout the market, said Pierre-Yves Gauthier, founding partner of Alphavalue SAS in Paris. “The market is reacting violently because of the surprise factor. Acceptance of the plan was almost a given,” he told Bloomberg Television.
Wal-Mart, the world’s biggest retailer, lost 1.6 percent to $53.89 in Germany. Bed Bath & Beyond Inc., the largest U.S. home- furnishings retailer, decreased 3.4 percent to $23.45.
Purchases probably declined 2 percent last month, extending the longest drop since record-keeping began in 1992, according to the median estimate in a Bloomberg News survey of economists. Other reports today may show wholesale prices slumped, led by plummeting commodity costs, and consumer sentiment sank to a 28- year low.
Exxon Mobil Corp., the world’s largest company, sank 3.2 percent to $77.43 in Germany. Crude oil for January delivery declined as much as 6.8 percent to $44.70 a barrel on the New York Mercantile Exchange.
Metals Slump
Alcoa Inc., the biggest U.S. aluminum producer, retreated 3.2 percent to $9.66 in German trading. The metal slid along with copper, lead and nickel in London on concern demand for commodities in China and the U.S. will weaken further.
American Express Co. lost 6.9 percent to $18.74 in Germany. The stock was rated “sell” in new coverage at Deutsche Bank, saying the credit-card company will “likely be challenged by the weakest consumer spending in decades and possibly the highest credit losses in history.”
The brokerage also rated Capital One Financial Corp., a credit-card lender and bank, “sell” in new coverage.
Waters Corp., the 50-year-old maker of equipment used in chemical analysis, may move after Deutsche Bank cut its recommendation to “hold” from “buy.”
Capital One and Waters shares didn’t trade in Europe.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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