April 8 (Bloomberg) -- U.S. stock futures swung between gains and losses as a takeover in the homebuilding industry and speculation life insurers will be bailed out by the government offset a drop in commodity producers.

Centex Corp. rallied 28 percent after Pulte Homes Inc. agreed to buy the company in a $1.3 billion deal to create the largest U.S. homebuilder by sales. Hartford Financial Services Group Inc., Prudential Financial Inc. and MetLife Inc. gained after the Wall Street Journal said the Treasury may expand its Troubled Asset Relief Program to life insurers. Mosaic Co., North America’s second-largest fertilizer producer, slumped 8.5 percent after profit tumbled as farmers delayed purchases.

Futures on the S&P 500 expiring in June increased 0.2 percent to 815.8 at 8:28 a.m. in New York after dropping as much as 1.4 percent. Dow Jones Industrial Average futures rose less than 0.1 percent to 7,766 and the Nasdaq-100 Index contract added 0.8 percent to 1,291.

U.S. stocks slid yesterday after investors from George Soros to Marc Faber predicted the rebound in equities will falter as the market braces for a seventh straight quarter of dropping earnings.

Profits at S&P 500 companies probably fell 37 percent on average in the first quarter, according to analysts’ estimates compiled by Bloomberg. The stretch of seven straight declines in earnings is the longest since at least the Great Depression, data compiled by S&P and Bloomberg show.

Earnings Watch

U.S. earnings may drop 31 percent in the second quarter and 18 percent in the next before gaining 76 percent in the last three months of the year, analysts predict. Banks are projected to account for all of the rebound in the final three months of the year. Without financial companies, the gain turns into a 4.5 percent decline, the data show.

Europe’s Dow Jones Stoxx 600 Index fell 0.4 percent as a report showed the U.K. economy shrank 1.5 percent in the first quarter. The MSCI Asia Pacific Index sank 2.2 percent.

Mosaic tumbled 6.2 percent to $40.26 in New York. North America’s second-biggest fertilizer maker posted an 89 percent decline in fiscal third-quarter profit as farmers delayed purchases of phosphate and potash crop nutrients.

Alcoa, the first company in the Dow average to announce results, slid 3.5 percent to $7.52 in New York. The company reported a $497 million net loss in the first quarter. Excluding some items, the loss was 59 cents a share, trailing the average estimate of 14 analysts for a loss of 56 cents.

ConocoPhillips Downgrade

ConocoPhillips slipped 1.4 percent to $39.15. The company is unlikely to increase oil and natural gas production over the next five years, according to UBS analysts, who downgraded the stock to “neutral” from “buy.”

Crude oil fell for a fourth day on speculation a government report today will show U.S. supplies increased as the recession curbed fuel demand.

Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, fell 0.5 percent to $41.17. Peabody Energy Corp., the largest U.S. coal producer, lost 0.7 percent to $26.37.

Centex jumped 28 percent to $9.75 in New York, while Pulte shares were yet to trade. Based on the closing price of Pulte stock on April 7, 2009, the transaction has a value of $10.50 per Centex share, representing a premium of 32.6 percent to the 20-day volume weighted average trading price of Centex’s shares.

The S&P 500 and the Dow average have surged at least 19 percent since reaching the lowest levels in a dozen years on March 9 as banks from Citigroup Inc. to JPMorgan Chase & Co. said they made money in the first two months of the year and Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets.

‘Dead Cat Bounce’

The rally in global stocks over the past month is a “dead cat bounce,” as companies report “terrible” earnings this year and the recession persists, Aberdeen Asset Management Plc’s Hugh Young said in a Bloomberg Television interview.

Nouriel Roubini, the New York University professor who predicted the economic crisis, told Canada’s Business News Network yesterday he sees no reason to change his forecast that the U.S. economy will continue to contract through this year.

A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.

The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is “mixed.” Three of the group’s members disagreed with at least some of the findings.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

Last Updated: April 8, 2009 08:30 EDT