Nov. 5 -- U.S. stock-index futures tumbled after Citigroup Inc. said it may write down an additional $11 billion, heightening concern that financial companies will report more losses tied to subprime home loans.
Citigroup, which fell to a four-year low on Oct. 2, retreated further after it said the deteriorating values of subprime mortgages and related securities will reduce profit. Merrill Lynch & Co., Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. also dropped.
Standard & Poor's 500 Index futures expiring in December slid 17.9 to 1,499.7 as of 8:35 a.m. in New York. Dow Jones Industrial Average futures lost 135 to 13,507. Nasdaq-100 Index futures decreased 20.75 to 2,202.75. Stocks also fell in Europe and Asia, led by financial firms including Societe Generale SA and Mitsubishi UFJ Financial Group Inc.
``This adds a new doubt,'' said Salah Seddik, a fund manager at Richelieu Finance in Paris, which oversees $5 billion. ``Losses could be more than expected and the return to normal is taking longer than we thought.''
Banks, securities firms and other financial companies in the S&P 500 have tumbled 14 percent as a group this year amid speculation that more losses lie ahead for their holdings of securities backed by mortgages and corporate loans.
Firms in the S&P 500 Financials Index that released third- quarter results so far reported an average profit decline of 22 percent, the worst quarter since Bloomberg began tracking the data in 1997. Analysts expect earnings to drop 4 percent this quarter, according to estimates compiled by Bloomberg.
Citigroup
The S&P 500 has fallen 3.6 percent from its Oct. 9 record as losses linked to subprime mortgages mounted. Financial companies account for about 19 percent of the index's value.
Citigroup retreated $1.23 to $36.50. Chief Executive Officer Charles O. ``Chuck'' Prince stepped down after credit-market losses contributed to a 32 percent decline in Citigroup's shares this year. The company had its credit rating cut by Fitch Ratings and placed on review for possible downgrade by S&P. Citigroup also reduced its third-quarter earnings per share by 3 cents after correcting the value of some securities backed by pools of bonds.
Merrill, the world's biggest brokerage, lost $1.53 to $55.75. Lehman analysts cut their recommendation on the shares to ``equal weight'' from ``overweight'' and lowered their price estimate to $58 from $79.
Goldman, the biggest securities firm by market value, dropped $3.85 to $225.75. Lehman, the largest U.S. underwriter of mortgage bonds, declined $1.62 to $58.50.
Europe's Dow Jones Stoxx 600 Index fell 0.7 percent to 377.26. The Morgan Stanley Capital International Asia Pacific Index lost 1.7 percent to 165.68.
Other Markets
U.S. Treasuries rose, driving yields on two-year notes to near their lowest since July 2005, as investors sought a haven in government debt.
The risk of European companies defaulting on their bonds rose to the highest in almost three months, based on trading in credit-default swaps. The yen rose against the 16 most-traded currencies as traders pared investments bought with money borrowed in Japan.
American International Group Inc. added 38 cents to $59.50. The company's former chief executive, Maurice ``Hank'' Greenberg, began a campaign to shake up the insurer's management and may seek the sale of some units.
WellCare Health Plans Inc. advanced $11.28 to $38.65. The U.S. health insurer that lost most of its market value after fraud investigators raided its offices said profit rose 67 percent in the third quarter on gains in government revenue.
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