U.S. Stock-Index Futures Retreat; Research in Motion, GM Fall

By Elizabeth Stanton

Dec. 3 (Bloomberg) -- U.S. stock futures dropped after an industry report showed companies cut the most jobs since 2001 and Research In Motion Ltd.’s earnings trailed its forecast, spurring concern the recession is deepening.

Citigroup Inc. and Alcoa Inc. dropped more than 3 percent to lead declines in Dow Jones Industrial Average stocks trading in Europe as ADP Employer Services said U.S. payrolls shrank by a larger-than-forecast 250,000 jobs last month. Research In Motion, maker of the BlackBerry, tumbled 6.9 percent. General Motors Corp., the largest U.S. automaker, slid 5.8 percent after telling Congress it needed $8 billion to stay in business.

Futures on the Standard & Poor’s 500 Index expiring in December lost 18.8, or 2.2 percent, to 830.2 at 9:03 a.m. in New York. Dow Jones Industrial Average futures fell 163, or 1.9 percent, to 8,269, while Nasdaq-100 Index futures retreated 2.7 percent to 1,102.75.

“Investors are being blown around with the wind and the economic situation is horrible,” said Roger Nightingale, a London-based global strategist at Pointon York Ltd. “There is not a single piece of good data.”

Futures extended declines as ADP’s estimate of job losses topped the 205,000 forecast by economists in a Bloomberg survey, spurring concern that the government’s Dec. 5 jobs data will also be worse than forecast. Another report today may show service industries contracted in November at the fastest pace on record as the economy sinks deeper into recession.

42 Percent Slide

The S&P 500 is down 42 percent this year as credit losses and writedowns at financial firms approach $1 trillion and more economists forecast that the U.S. recession will be one of the most severe in the post-World War II era. The economy entered a recession in December 2007, the panel of economists that dates American business cycles said this week.

U.S. equities rose yesterday, rebounding from the market’s worst tumble since October, after General Electric Co. announced plans to maintain its dividend and the Fed extended terms of three emergency loan programs.

The 30-company Dow average has swung by an average of 517 points between intraday highs and lows over the last two months, and the 20-day average exceeded a record 600 points in October.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 42, the lowest level since records began in 1997, according to the median forecast in a Bloomberg News survey of economists. Readings below 50 indicate a contraction. ISM said earlier this week that its factory index dropped in November to the lowest level since 1982.

Missing Forecast

Research In Motion slid 6.9 percent to $34.75. The company said profit rose to no more than 83 cents a share in the quarter ended Nov. 29, missing a company forecast of as much as 97 cents. The results were preliminary, with the full financial report due on Dec. 18.

Apple Inc., maker of the iPhone handset, retreated 2.7 percent to $89.94.

Earnings dropped 17 percent on average at companies in the S&P 500 that have reported third-quarter results and analysts estimate full-year profits to fall 11 percent, data compiled by Bloomberg show. That compares with 15 percent growth forecast in January.

GM slumped 5.8 percent to $4.57 in Germany. The automaker told Congress it must have $4 billion this month and $4 billion more by the end of January to stay in business. Chrysler LLC also told Congress it needs $7 billion right away.

“I believe that an intervention will happen,” House Speaker Nancy Pelosi, a California Democrat, told reporters at a briefing yesterday as GM, Chrysler and Ford Motor Co. sent their aid requests to Congress. “Everybody is disadvantaged by bankruptcy, including our economy, so that’s not an option.”

‘Pretty Frightful’

GM’s total request is $18 billion; Chrysler’s is $7 billion and Ford’s is $9 billion for a credit line it said it may not need to tap. Ford shares rose 3.7 percent to $2.80 in Germany.

“In the near future the outlook is pretty frightful,” said Pointon York’s Nightingale. “Sales are going to plunge and there is far too much capacity. There will be failures.”

Freeport-McMoRan Copper & Gold Inc. tumbled 16 percent to $18.30. The world’s second-largest copper producer said it will reduce output by 5 percent next year and 11 percent in 2010 after a “sharp decline” in prices.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.