U.S. Stock-Index Futures Fall; Bank of America, Wachovia Drop

Dec. 17 -- U.S. stock-index futures dropped after Citigroup Inc. cut its ratings on nine U.S. banks on expectations of bigger credit-market losses.

Bank of America Corp., Wachovia Corp. and Wells Fargo & Co. led declines after Citigroup said financial companies face an ``increasingly difficult environment.'' Caterpillar Inc. dropped after Morgan Stanley advised investors to sell shares of the world's largest maker of earthmoving equipment on the prospect of a ``mild U.S. recession.''

Standard and Poor's 500 Index futures expiring in March slipped 6 to 1,472.4 at 9:20 a.m. in New York. Dow Jones Industrial Average futures sank 58 to 13,382. Nasdaq-100 Index futures lost 7 to 2,086.75. Benchmark indexes in Asia and Europe retreated.

``The thing that has held the market back is the unknown, the uncertainty, how big is the problem?'' said David Darst, who manages more than $700 billion as chief investment strategist at Morgan Stanley Global Wealth Management in New York. ``We have some further shoes to drop as we unfold in '08.''

Stocks around the world dropped after Australia's Centro Properties Group, the owner of 700 U.S. shopping malls, said it's struggling to pay debt because of a lack of funding in the wake of the subprime mortgage collapse.

Bank of America, Wachovia

Bank of America, the second-biggest U.S. bank, slipped 33 cents to $41.83. Wachovia, the fourth-largest, lost 35 cents to $38.68. Wells Fargo & Co., the No. 2 U.S. mortgage lender, dropped 12 cents to $29.95.

Caterpillar declined $1.79 to $71.60. Morgan Stanley cut the shares to ``underweight'' from ``equal weight.'' U.S. construction equipment volumes and prices will experience negative growth in 2008, analysts including Robert Wertheimer wrote in a note to client.

Countrywide Financial Corp. declined 14 cents to $9.665. Citigroup analysts cut their rating on the biggest U.S. home lender to ``hold'' from ``buy'' on expectations it may report earnings below analysts' estimates as mortgage market conditions deteriorate.

Starbucks Corp., the world's biggest chain of coffee shops, lost 24 cents to $21.01 after RBC Capital Markets lowered its rating on the shares to ``sector perform'' from ``outperform.''

Trane

Trane Inc. surged $8.70 to $45.90 after the maker of heaters and air conditioners agreed to be bought by Ingersoll- Rand Co. for $10.1 billion in cash and stock. Ingersoll-Rand will pay $36.50 in cash and 0.23 of a share for Trane, valuing the manufacturer at $47.81 based on the Dec. 14 closing price. The offer is 29 percent more than Trane's close that day.

Manufacturing in New York expanded at the weakest pace since May as orders for new business slowed and companies cut inventories. The New York Federal Reserve Bank's general economic index fell to 10.3 from 27.4 in November, the bank's Buffalo branch said, lower than the reading of 20 forecast by economists in a Bloomberg survey.

U.S. stocks fell Dec. 14 after accelerating inflation spurred concern that higher prices will curb consumer spending and give the Federal Reserve less leeway to cut interest rates.