U.S. Stock Futures Fall

U.S. Stock Futures Fall; Bank of America, Citigroup, Alcoa Drop

By Adria Cimino

April 7 (Bloomberg) -- U.S. stock-index futures declined as George Soros said the four-week rally isn’t the start to a bull market and investors speculated Alcoa Inc. will kick off the first-quarter earnings season with a loss.

Bank of America Corp. and Citigroup Inc. slid at least 4.3 percent in early New York trading, while Alcoa dropped 1.9 percent. Applied Materials Inc. fell 2.2 percent in Germany after the value of a $1.9 billion solar-power contract was cut.

Futures on the Standard & Poor’s 500 Index expiring in June retreated 1.5 percent to 818.10 as of 11:44 a.m. in London. Dow Jones Industrial Average futures lost 1.3 percent to 7,814 and Nasdaq-100 Index futures slipped 1.3 percent to 1,294.50. European and Asian stocks declined.

“The first quarter will be a reality check for investors, and they will be focusing on guidance,” said Charles Dautresme, a strategist at Axa Investment Managers, which oversees $651 billion in Paris. “We’ll decline from this bear-market rally, but have established a floor on March 9 and that’s positive.”

The S&P 500 has rebounded 23 percent from a 12-year low on March 9. Investors should “underweight” U.S. shares as the recent rally is likely to end, Citigroup Inc. recommended, while Marc Faber said the benchmark index will drop as much as 10 percent before resuming gains.

Stocks capped a fourth straight week of advances on April 3, the longest stretch since the bear market began in 2007, as the economy showed signs of improvement, Group of 20 leaders agreed on measures to halt the recession and accounting regulators relaxed rules on so-called fair-value accounting.

‘Bear-Market Rally’

“It’s a bear-market rally because we have not yet turned the economy around,” Soros, the billionaire hedge-fund manager who made money last year while most peers suffered losses, said in an interview yesterday with Bloomberg Television.

Faber, the investor who recommended buying U.S. stocks before the steepest rally in more than 70 years, said in a Bloomberg Television interview that the S&P 500 Index may decline to about 750 and rebound after July.

U.S. stocks fell yesterday for the first time in five days as Mike Mayo, analyst at Calyon Securities, advised selling bank shares and International Business Machines Corp.’s purchase of Sun Microsystems Inc. collapsed.

The International Monetary Fund will raise its estimates for U.S. bad debt to $3.1 trillion from a January prediction of $2.2 trillion, with estimates of another $900 billion of toxic assets from Europe and Asia, the Times newspaper reported today in London, without saying where it got the information.

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