U.S. Stock Futures Decline Before Jobless Report; Alcoa Slips

By Adam Haigh

Aug. 7 (Bloomberg) -- U.S. stock-index futures slipped, indicating the Standard & Poor’s 500 Index will trim its weekly gain, before a report that may show the unemployment rate climbed to a 26-year high.

Alcoa Inc. led a retreat among raw-material producers as metals fell and the second-largest bank in China said it will reduce new loans by about 70 percent. Nvidia Corp. jumped 5.2 percent in pre-market New York trading after the second-biggest maker of graphics chips forecast higher-than-estimated sales for the third quarter. American International Group Inc. surged 9.8 percent as second-quarter earnings topped analyst projections.

Futures on the S&P 500 expiring in September retreated 0.3 percent to 992.1 at 12:24 p.m. in London. The benchmark gauge for U.S. equities has added 1 percent so far this week, heading for a fourth straight weekly advance. Dow Jones Industrial Average futures lost 0.3 percent to 9,198 and Nasdaq-100 Index futures declined 0.2 percent to 1,598.5.

“The key thing will be the Labor data today in the U.S.” said Sean Landers, head of U.S. equities at Pali International in London. “We potentially have a fairly good earnings outlook for 2010,” he told Bloomberg Television.

The recent rally has pushed the valuation of the S&P 500 to 18.5 times its companies’ earnings over the past 12 months, the most expensive since March 2005, according to weekly data compiled by Bloomberg.

Earnings

Companies in the S&P 500 are headed for a record eighth consecutive drop in quarterly profits. Per-share earnings have tumbled 32 percent on average in the second quarter. Analysts predict a 22 percent third-quarter decline before a 62 percent rebound in earnings in the final three months of the year.

While profits are falling, results have surpassed projections by an average of 10 percent in the current season. Per-share earnings have beaten estimates at three-quarters of the 443 companies in the S&P 500 that released second-quarter results since June 17, according to data compiled by Bloomberg.

U.S. employers probably cut 325,000 workers from payrolls in July after trimming 467,000 the prior month, according to the median of 82 estimates in a Bloomberg News survey. The unemployment rate likely rose to 9.6 percent from 9.5 percent, the highest in 26 years, economists said before a Labor Department report due at 8:30 a.m. in Washington.

Alcoa dropped 1 percent to $12.67 in pre-market trading in New York. Copper, lead, nickel, tin and zinc prices declined in London today. China Construction Bank Corp. President Zhang Jianguo said he will cut new lending by about 70 percent in the second half to avert a surge in bad debt, spurring concern this may hamper growth.

Nvidia Gains

Nvidia soared 5.2 percent to $13.80 after it forecast sales of as much as $830.9 million in the third quarter, compared with an average analyst estimate of $757 million.

AIG climbed 9.8 percent to $24.74. The insurer bailed out by the U.S. government reported second-quarter earnings per share of $2.57 on an adjusted basis, beating the $1.50 average analyst estimate.

D.R. Horton Inc., the largest U.S. homebuilder by sales, gained 1.6 percent to $12.74 in German trading as Goldman Sachs Group Inc. added the shares to its “conviction buy” list.

Chiquita Brands International Inc. will probably move after the seller of bananas and other produce posted second-quarter earnings excluding some items of $2.08 a share, more than twice the average analyst estimate, according to Bloomberg data.

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