Jan. 22 (Bloomberg) -- U.S. stock-index futures tumbled, signaling the worst decline for the Standard & Poor's 500 Index since 2001, on concern the economy is shrinking and the biggest Federal Reserve interest rate cut in 23 years won't revive it.

Exxon Mobil Corp., the largest oil company, and Barrick Gold Corp., the biggest gold producer, fell as crude and metal prices decreased. Bank of America Corp. declined after the second-largest U.S. bank said earnings dropped 95 percent.

S&P 500 Index futures expiring in March retreated 58.7, or 4.4 percent, to 1,266.6 at 8:58 a.m. in New York after earlier slumping as much as 5.3 percent. Dow Jones Industrial Average futures decreased 466 to 11,640. Nasdaq 100 futures lost 80.75 to 1,768.75.

``People may see it as an extreme step and feel that it's a sign the situation is worse than they had anticipated,'' said John Carey, who helps oversee about $13 billion at Pioneer Investment Management in Boston. ``This will definitely wake people up who were thinking the economy was just fine.''

The Fed lowered its benchmark rate by 0.75 percentage point to 3.5 percent in its first emergency move since 2001. Policy makers weren't scheduled to gather on rates until Jan. 29-30.

``While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate,'' the Fed said in a statement. The Federal Open Market Committee took the action ``in view of a weakening of the economic outlook and increasing downside risks to growth.''

A 4.4 percent decline in the S&P 500 would be the biggest since a 4.9 percent drop on Sept. 17, 2001, the first trading day after the Sept. 11 terrorist attacks.

The U.S. market was closed for Martin Luther King Day yesterday. Stocks posted the steepest weekly drop since July 2002 last week after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is contracting.

Global Slump

The MSCI World Index fell 1 percent. The Dow Jones Stoxx 600 Index of European shares slumped 0.8 percent.

Exxon decreased $4.08 to $81 and Barrick lost 98 cents to $45.75.

Bank of America slid $2.22 to $33.75. Fourth-quarter net income fell to $268 million, or 5 cents a share, from $5.26 billion, or $1.16, a year earlier the bank said in a statement. Excluding merger and restructuring costs and a gain from the sale of Marsico Capital Management LLC, the company earned 5 cents a share, missing the 21-cent average estimate of analysts surveyed by Bloomberg.

Wachovia Corp., the fourth-largest U.S. bank, said profit fell 98 percent after writedowns for bad loans and mortgage- backed securities. Its shares slipped $1.65 to $29.15.

`One Shock'

The U.S. economy may be ``one shock'' away from a recession, with the global slump in stocks a possible ``tipping point,'' according to Lehman Brothers Holdings Inc. The New York-based firm sees the odds of a recession in the world's largest economy at 40 percent, rising from a ``1-in-3 chance'' at the beginning of the year, Paul Sheard, Lehman's global chief economist, said in a press briefing in Singapore today.

Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. are already forecasting the U.S. will slip into recession this year. The world's largest banks and securities firms have announced more than $100 billion in debt writedowns and loan losses after the collapse of the U.S. subprime mortgage market.

The MSCI Asia Pacific Index today lost 6.4 percent. Japan's Nikkei 225 Stock Average dropped 5.7 percent, while India's Sensitive Index fell 5 percent.

Goldman, Merrill

Goldman, the world's largest securities firm, dropped $9.21 to $178. Merrill, the biggest U.S. brokerage, retreated $2.77 to $49.10.

Apple Inc. is scheduled to report first-quarter earnings after the close of U.S. exchanges. The maker of Macintosh computers may report earnings of $1.61 a share, the average of 23 estimates in a Bloomberg survey. The shares lost $10.39 to $150.97.

``Apple and Johnson & Johnson will give a good indication of consumer spending worldwide,'' Joerg de Vries-Hippen, chief investment officer for European stocks at Allianz Global Investors in Frankfurt, said in a Bloomberg Television interview today.

Analysts estimate companies in the S&P 500 will report an average 17 percent decline in profits in the fourth quarter, led by a 95 percent decrease in financial company earnings, according to a Jan. 18 Bloomberg survey.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Last Updated: January 22, 2008 09:04 EST