U.S. stock futures slid, indicating the market may slide for a second day, as a government report showing employment growth stalled last month stoked concern the economy may fall into a recession.
Caterpillar Inc. and General Motors Co. lost at least 2.5 percent to help lead declines among companies most-sensitive to economic growth. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) tumbled following a report that the lenders may be sued by the U.S. Federal Housing Finance Agency. Netflix Inc. (NFLX) plunged 9.5 percent after the Starz LLC cable network walked away from contract-renewal talks amid a standoff over pricing.
Futures on the S&P 500 expiring this month fell 1.5 percent to 1,183.1 at 8:46 a.m. in New York. Contracts on the Dow Jones Industrial Average retreated 141 points, or 1.2 percent, to 11,324. The S&P 500 sank 5.7 percent in August, its biggest monthly decline since May 2010.
“The jobs report was just ugly,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “We’ve been watching deceleration of economic activity on a global basis. Does that increase the odds of a recession? It’s a coin toss at this point, 50-50. This will probably push the Federal Reserve over the edge.”
The S&P 500 plunged 18 percent from a three-year-high on April 29 through Aug. 8 amid growing concern the nation may relapse into a recession. Stocks trimmed losses at the end of last month after Federal Reserve Chairman Ben S. Bernanke said during an Aug. 26 speech in Jackson Hole, Wyoming, that the central bank still has tools to stimulate the economy without signaling that he will use them.
Bernanke and Jobs
Last year, Bernanke foreshadowed a $600 billion bond- purchase program at the same event, helping to stoke a 30 percent surge in the S&P 500 through April 29.
Employment in the U.S. unexpectedly stagnated in August and the jobless rate held at 9.1 percent as American employers became less confident in the strength of the recovery.
Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was les than initially estimated, Labor Department data showed. The median forecast in a Bloomberg News survey called for a rise of 65,000. Hourly earnings and hours worked both declined. The August data included a 48,000 drop in information industry jobs, mostly reflecting striking Verizon Communications Inc. workers.
Bank of America
Bank of America sank 6.4 percent to $7.40 in early New York trading. The Charlotte, North Carolina-based lender, JPMorgan, Goldman Sachs Group Inc. (GS) and Deutsche Bank AG are among firms that may be sued by the agency for misrepresenting the quality of mortgage securities sold at the height of the housing bubble, the New York Times said. JPMorgan declined 2.5 percent to $35.41, while Goldman Sachs slipped 0.5 percent.
Netflix dropped 9.5 percent to $211 in New York after Starz, which is controlled by John Malone’s Liberty Media Corp., said it ended contract-renewal talks with the mail-order and online film-rental service. If the contract lapses as scheduled on Feb. 28, Netflix will be without online access to films from Sony Pictures and Walt Disney Co.
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