U.S. Stock Futures Fall on European Woes as Jobless Claims Rise

U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will drop for a second day, amid concern about the effects of the European debt crisis on banks and as American jobless claims rose more than forecast.

JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) retreated after European Central Bank President Jean-Claude Trichet said the debt crisis threatens to infect banks. Chevron Corp. (CVX) and Freeport-McMoRan Copper & Gold Inc. (FCX) declined at least 1.6 percent as a rising dollar sent commodities down. ConAgra Foods Inc. (CAG) slumped 2.6 percent as the food manufacturer reported profit that missed analysts’ estimates.

S&P 500 futures expiring in September slid 1.2 percent to 1,264.30 at 9:03 a.m. in New York. The benchmark gauge yesterday snapped a four-day rally after the Federal Reserve lowered its forecast for economic growth. Dow Jones Industrial Average futures retreated 119 points, or 1 percent, to 11,903 today.

The S&P 500 has fallen 4.3 percent this month through yesterday as reports showed consumer confidence dropped more than forecast and sales of existing homes decreased. The index was still up 2.4 percent in 2011 through yesterday amid better- than-expected earnings and government stimulus measures.

Global stocks fell today as Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks.

“On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. “The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union.”

‘Russia-in-1998’

The Greek crisis has all the elements that dogged Russia during its 1998 default, according to Sergei Ulatov, the resident World Bank economist in Moscow.

“The Greece example reminds me very much of what was happening in Russia in 1998, but on a much larger scale,” Ulatov said in an interview during the Russia and CIS Capital Markets Forum organized by Euromoney in London today.

Stock-futures extended losses before the start of regular trading as a report showed that applications for jobless benefits increased 9,000 in the week ended June 18 to 429,000, Labor Department figures showed today. The level of claims exceeded the highest estimate in a Bloomberg News survey in which the median projection called for 415,000 filings. The number of people on benefit rolls was little changed, while those getting extended payments rose.

New Home Sales

Purchases of new houses probably dropped in May for the first time in three months, showing the real-estate market is struggling to gain traction. Sales likely decreased 4 percent to a 310,000 annual rate last month, according to the median forecast of 67 economists surveyed by Bloomberg News. The Commerce Department’s report is due at 10 a.m. in Washington.

Banks declined. JPMorgan retreated 1.3 percent to $40.16. Citigroup fell 1.4 percent to $38.97.

Energy and raw material producers slumped as the dollar rose, curbing demand for commodities as alternative investments. Chevron slid 1.7 percent to $99.40. Freeport-McMoRan dropped 2.1 percent to $47.85.

ConAgra declined 2.6 percent to $24.75. The food manufacturer attempting to acquire Ralcorp Holdings Inc. (RAH) said its consumer food unit was “challenged by difficult conditions” in the latest quarter because of higher costs, according to a statement. The company, the maker of Chef Boyardee pasta and Slim Jim snacks, raised prices earlier this year to help offset higher wheat costs. The U.S. Department of Agriculture predicts food prices will rise 4 percent in 2011.

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

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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