June 8 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may drop for a second day, as commodity producers declined with lower energy prices and concern grew that the Federal Reserve will start raising interest rates. Shares in Europe and Asia retreated.

Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, slid 2.7 percent on falling copper and gold prices. ConocoPhillips and Valero Energy Corp. declined as energy prices slid after a stronger dollar reduced the investment appeal of commodities. McDonald’s Corp. sank 2.5 percent after the world’s biggest restaurant company said earnings for the year may be hurt by foreign exchange rates.

S&P 500 futures expiring in June slipped 0.7 percent to 933.9 at 9:14 a.m. in New York. Dow Jones Industrial Average futures declined 0.8 percent to 8,696 and Nasdaq 100 Index futures fell 0.8 percent to 1,483.

The S&P 500 trimmed its third straight weekly advance on June 5 as concern higher interest rates will threaten an economic recovery overshadowed a better-than-estimated employment report. U.S. stocks last week extended a three-month rally that has lifted the S&P 500 by 39 percent since March 9 as the government and Federal Reserve pledged $12.8 trillion to end the first global recession since World War II.

“The gains have been very racy, but the hard economic data is still not good,” said Gregor Mast, an equity strategist at Clariden Leu in Zurich, which oversees about $88 billion. “We are taking a wait-and-see approach. What we need to see is profit growth, which is not apparent yet.”

Earnings Watch

U.S. corporate earnings are forecast to decline for two more quarters after dropping the last seven, the longest streak since the Great Depression, analysts’ estimates compiled by Bloomberg show.

Even as profits slump, traders now see a 34 percent chance the Federal Reserve will raise its benchmark interest rate by its September meeting, based on futures on the Chicago Board of Trade. The odds were 15 percent a week ago. The central bank cut the rate to a range of zero to 0.25 percent in December.

The dollar climbed to a one-week high versus the euro, advancing 0.6 percent to $1.3881 per euro.

Ireland had its credit rating lowered for the second time this year, to AA from AA+ by S&P, which cited the nation’s rising bill for propping up its banks. Europe’s Dow Jones Stoxx 600 Index declined 1.2 percent. The measure was valued at 24.9 times the earnings of its companies on June 5. That’s the most expensive level since 2004, weekly data compiled by Bloomberg show.

Asian Shares Slip

The MSCI Asia Pacific Index retreated 0.9 percent. Companies in the gauge currently trade at an average 1.5 times the book value of assets, the highest level since last September.

Freeport-McMoRan dropped 2.7 percent to $55.62. Copper fell as the strengthening dollar reduced the appeal of commodities as an alternative investment and increased costs for investors holding other currencies. Alcoa Inc., the largest U.S. aluminum producer, slipped 2.2 percent to $10.70.

Natural gas, coffee and silver led the Reuters/Jefferies CRB Index of 19 raw materials to a 0.4 percent retreat.

ConocoPhillips dropped 1.2 percent to $44.45 as crude for July delivery slid as much as 2.4 percent to $66.78 a barrel in New York. Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co., predicted oil prices may average $65 a barrel by the end of 2009.

McDonald’s Drops

McDonald’s slumped 2.5 percent to $58.40. The company estimated currency translation may cut earnings for the year by 20 cents a share.

Citigroup Inc. lost 2.3 percent to $3.38. The bank is poised to start a $58 billion stock swap that was delayed last week as Federal Deposit Insurance Corp. Chairman Sheila Bair questioned Chief Executive Officer Vikram Pandit’s leadership and the bank awaited regulatory approval from other agencies, people close to Citigroup said.

The S&P 500 traded at 14.8 times the earnings of its companies on June 5, data compiled by Bloomberg show. The gauge traded at 15.2 times profit on May 8, the highest since October, weekly data indicate.

The cost of borrowing in dollars between banks rose the most in almost three months, according to the British Bankers’ Association. The London interbank offered rate, or Libor, for three-month loans jumped two basis points to 0.65 percent today, the BBA said. It was the biggest increase since March 10.

Libor-OIS

The Libor-OIS spread, a measure of the unwillingness of banks to lend, widened almost three basis points to 42 basis points.

American common equity is increasing for the first time in five years, threatening to dilute corporate profits as companies sell a record amount of stock and cut dividends the most since 1938.

Wells Fargo & Co., ProLogis and more than 150 other companies raised $82.2 billion this quarter, beating the record pace at the height of the technology bubble in 2000, according to data compiled by Bloomberg. The combination of adding shares and restricting dividends will reduce annual equity returns as much as 4.1 percent, the data show.

Blackstone Group LP rose 3.5 percent to $11.30. The world’s biggest buyout company was raised to “buy” from “neutral” at Goldman Sachs Group Inc. The bank also added asset manager BlackRock Inc. to its “conviction buy” list.

To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net; Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Last Updated: June 8, 2009 09:20 EDT