Nov. 17 (Bloomberg) -- U.S. stock futures fell, indicating the market may extend a two-week slump, as manufacturing in New York contracted at a record pace and two of the nation's largest retailers said the recession is damaging consumer spending.

Caterpillar Inc. and Deere & Co. lost more than 1.9 percent after the Federal Reserve Bank of New York's general economic index fell to the lowest since records began in 2001. Target Corp. tumbled 5.4 percent after third-quarter profit decreased, while Lowe's Cos. sank 3.9 percent as its earnings forecast missed analysts' estimates. Citigroup Inc., the fourth-biggest U.S. bank by market value, slipped 2 percent after announcing plans to cut 50,000 jobs.

S&P 500 futures expiring in December slipped 0.6 percent to 856.2 at 9:14 a.m. in New York. Dow Jones Industrial Average futures decreased 0.5 percent to 8,326 and Nasdaq-100 Index futures fell 0.3 percent to 1,152.25.

``You're going to continue to get barraged with bad economic data,'' Bill Stone, who oversees $56 billion as chief investment strategist at PNC Wealth Management in Philadelphia, told Bloomberg Television. ``Earnings have hit a wall or fallen off a cliff in a lot of cases. You're not likely to see much help from this front for a while.''

The retreat in U.S. equities today followed stock-market declines in Asia and Europe after Japan unexpectedly slid into a recession and Britain's biggest business lobby said the U.K. slump may be deeper than earlier predicted.

The S&P 500 is down 41 percent this year as credit-related losses and writedowns at financial firms worldwide topped $965 billion, threatening global economic growth. The gauge is on course for the steepest annual decline since 1931.

Earnings Watch

Profits slumped 17 percent on average at companies in the S&P 500 that have reported third-quarter results, according to Bloomberg data. Analysts expect an 8.5 percent drop in full-year earnings, based on estimates compiled by Bloomberg.

Caterpillar lost 96 cents to $36, while Deere retreated 2.8 percent to $32.85.

Manufacturing in New York contracted in November as orders and sales plunged, the New York Fed's index showed. The measure fell to minus 25.4, the lowest since records began in 2001, from minus 24.6 percent in October, the bank said. Readings below zero for the Empire State index signal manufacturing activity is shrinking.

Target dropped 5.4 percent to $31.25. The second-largest U.S. discount chain said third-quarter profit fell as customers shunned higher-priced goods in favor of necessities. The company also said it's reduced its planned capital spending for 2009 by $1 billion.

Target, Lowe's

Target's results show that consumers are hewing to basics and avoiding jewelry, clothing and home goods, which account for more than 40 percent of its revenue. Customers bought primarily groceries and drugstore items, categories that make up a larger proportion of sales at Wal-Mart Stores Inc.

Lowe's dropped 39 cents to $17.84 in early New York trading. The company said it expects fourth-quarter earnings per shares of 8 cents to 16 cents, compared with an 18 cent estimate in a survey of analysts.

Citigroup Inc. fell 21 cents, or 2.2 percent, to $9.31 in trading before the open of U.S. exchanges. The bank plans to cut about 14 percent of its workforce as of Sept. 30, and reduce expenses by 20 percent from their peak as the global economy contracts.

Chief Executive Officer Vikram Pandit is scheduled to announce the plan to employees today. The reductions were disclosed in a presentation posted on New York-based Citigroup's Web site.

Dell Downgrade

Dell Inc., the second-largest U.S. computer maker, slid after the shares were downgraded to ``neutral'' from ``buy'' at Merrill Lynch, which said PC sales will decline next year as companies cut spending amid a slumping economy. The stock slipped 69 cents to $10.30.

General Motors Corp., seeking a federal bailout as its cash dwindles, climbed 6.3 percent to $3.20. The automaker will raise 22.4 billion yen ($230 million) by selling its 3 percent stake in Suzuki Motor Corp. The Japanese company said it will use cash to buy back its own shares.

UBS AG upgraded Yum! Brands Inc., owner of the Pizza Hut, Taco Bell and KFC chains, to ``buy'' from ``neutral,'' citing a recent share-price drop and potential for ``meaningful'' earnings-per-share growth. Yum! gained 40 cents to $25.38 in Germany.

`Fairly Valued'

The KBW Bank Index's retreat to a 12-year low last week may signal investors in U.S. financial stocks are ``ignoring'' an improvement in credit markets since October that's unlikely to reverse, according to Morgan Stanley.

The financial sector is ``fairly valued to moderately cheap,'' Abhijit Chakrabortti, Morgan Stanley's New York-based head of global equity strategy, wrote in a research note dated yesterday. He recommended shares of Wells Fargo & Co., JPMorgan Chase & Co., PNC Financial Services Group Inc., Bank of New York Mellon Corp. and State Street Corp.

Dubai Group, an investment company managing more than $40 billion on behalf of Dubai's ruler, plans to buy stakes in U.S. real-estate and asset management companies to profit from low prices. The group, which has already spent as much as $3.5 billion in the U.S., is focusing on the world's biggest economy because it has the potential to recover quicker from the global financial crisis than Europe, Chairman Soud Ba'alawy said today in an interview at a conference in Dubai.

A 9.9 percent decline in the S&P 500 so far this month left the index valued at 18.8 times earnings, near the lowest since September 2007. U.S. stocks tumbled on Nov. 14, capping a second straight weekly loss, as a record decrease in retail sales and weaker demand for mobile phones raised concern about the depth of the recession.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: November 17, 2008 09:20 EST