U.S. Stock-Index Futures Tumble After Employment Growth Trails Forecasts

U.S. stock futures sank, signaling benchmark indexes may erase a weekly gain, as lower-than- forecast growth in jobs damped optimism about the economy.

United Parcel Service Inc., Home Depot Inc. and Wells Fargo & Co. fell at least 1.4 percent to lead declines in the largest U.S. stocks after the Labor Department reported growth in jobs that was less than one-fifth the median economist forecast. Google Inc. (GOOG), the world’s biggest Internet-search company, dropped 2.3 percent as Morgan Stanley downgraded the shares.

Futures on the S&P 500 expiring in September lost 1.2 percent to 1,335.5 at 8:55 a.m. in New York. Futures on the Dow Jones Industrial Average declined 119 points, or 0.9 percent, to 12,562, erasing earlier gains after the Labor Department report also showed an unexpected increase in the jobless rate.

“It means that we’re still a ways off from getting to where we should be,” Warren Buffett, the billionaire chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc., said in an interview with Bloomberg Television’s Betty Liu on the “In the Loop” program. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip,” or relapse into a recession.

Futures wiped out earlier gains after Labor Department data showed U.S. employers added 18,000 workers in June, the fewest in nine months and less than the median forecast of 105,000 jobs in a Bloomberg News survey of economists, and the unemployment rate unexpectedly climbed to 9.2 percent.

‘Complete Whiff’
“The report is exceedingly disappointing,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “It fell short of just about everyone’s expectations and it certainly has to disappoint equity investors. It wasn’t just a miss, it was a complete whiff.”

The S&P 500 had climbed 6.7 percent since the start of last week as Greek lawmakers passed a five-year austerity package, qualifying the country for further aid, and yesterday’s report from ADP Employer Services showed U.S. companies added twice as many jobs as forecast in June. The index closed yesterday about 10 points shy of a three-year high reached on April 29.

Investors are also turning their attention to the second- quarter earnings season, which unofficially kicks off on July 11 with Alcoa Inc., the first Dow company to release results. Corporate profits are forecast to have grown by 13 percent in the period, according to analyst estimates compiled by Bloomberg, the smallest increase in two years. ] Google dropped 2.3 percent to $534 in pre-market New York trading after Morgan Stanley cut its recommendation to “equal weight” to “overweight.”