By Adria Cimino and Elizabeth Stanton Nov. 5 (Bloomberg) -- U.S. stock-index futures declined, following the biggest Election Day rally in 24 years, on speculation the economy will deteriorate even as President-elect Barack Obama takes steps to stimulate growth. Nucor Corp., the largest U.S.-based steel producer, fell 3.2 percent after ArcelorMittal, the world’s biggest steelmaker, doubled production cuts amid slowing demand. Transocean Inc., the world’s largest offshore oil driller, slid 4.2 percent after reporting third-quarter profit that fell short of the average analyst estimate. A report today may show service industries shrank in October for the sixth time in 10 months. Futures suggested the Standard & Poor’s 500 Index will drop after an 18 percent rebound from a five-year low on Oct. 27. The benchmark for U.S. equities has lost 32 percent this year, the steepest annual retreat since 1937, and Obama will have to contend with an economy pummeled by the fastest contraction in manufacturing in 26 years and the lowest consumer confidence. “The rally has already taken place as polls made it clear who would be elected,” said Gilles Fleckenstein, chief executive officer of BNP Paribas Asset Management in Paris, which oversees $419 billion in assets. “Now, people will wait to see what happens. We’re in the heart of the recession now.” S&P 500 futures expiring in December dropped 1.3 percent to 989.9 as of 8:53 a.m. in New York. Dow Jones Industrial Average futures retreated 1 percent to 9,490 and Nasdaq-100 Index futures decreased 1.4 percent to 1,361.25. Futures remained lower after an industry report based on payroll data showed companies cut an estimated 157,000 jobs in the U.S. in October, more than forecast. The report by ADP Employer Services precedes by two days the Labor Department’s release of employment data for October, expected to show U.S. payrolls shrank for a 10th straight month. $6 Trillion The S&P 500 has lost 36 percent since it peaked at 1,565.15 on Oct. 9, 2007, as the U.S. economy contracted 0.3 percent last quarter and credit-related losses and writedowns by global financial firms approached $700 billion. More than $6 trillion was erased from U.S. equities this year by the worst financial crisis since the Great Depression. Stocks gained yesterday after the 17th straight decline in a key interest rate, a sign that as much as $3 trillion of emergency funds provided by governments to resuscitate bank lending are working. The London interbank offered rate, or Libor, that banks charge each other for three month loans in dollars fell again today to the lowest level since December 2004. Steelmakers Drop Nucor lost $1.28 to $38.38. Luxembourg-based ArcelorMittal reported third-quarter profit that fell short of analyst estimates, said its global output will drop by more than 30 percent, and forecast fourth-quarter earnings will fall as much as 48 percent. The company’s New York-registered shares slumped 17 percent to $26.32. Transocean fell $3.52 to $81 even as rising oil prices during the third quarter boosted demand for deepwater rigs, contributing to a 14 percent increase in profit. Net income of $3.44 a share missed the average estimates of $3.59 in a Bloomberg survey. The Institute for Supply Management’s non-manufacturing index, which covers almost 90 percent of the economy, dropped to 47 from 50.2 in September, according to the median estimate of 69 forecasts in a Bloomberg News survey. A reading of 50 is the dividing line between growth and contraction. The report is due at 10 a.m. New York time. The S&P 500 Index may be on the cusp of a rally by Inauguration Day, based on the speed of its tumble from last year’s peak and the time it took stocks to gain before recessions ended in 1975, 1982 and 1991, data compiled by Bloomberg show. This year’s plunge in stocks suggests that equity investors anticipate an economic contraction as severe as the one that began under Richard Nixon that will end in July. Recession The S&P 500’s slump since last year’s high is the steepest for a comparable period since the gauge fell 43 percent in the 13 months ended in October 1974, Bloomberg data show. The economy then was mired in a recession that lasted 16 months and ended in March 1975, five months after the equity market began its rebound. During the recessions of 1982 and 1991, the S&P 500 began to climb four months and five months before the economy started to recover, respectively. Based on the market’s history of anticipating economic recoveries, the S&P 500 may embark on its next bull market in February, about a month after Obama’s inauguration on Jan. 20. The president-elect’s pledge to spend on roads and bridges probably will help Caterpillar Inc. The world’s largest maker of bulldozers and excavators added 0.7 percent to $42.53 in Germany. Airlines Delta Air Lines Co. and other airlines may face higher costs. Obama also has pledged to keep current limits on foreign ownership of U.S. airlines’ stock, and may accelerate air-traffic control upgrades and improve controllers’ working conditions, according to industry groups and unions. Drugmakers including Pfizer Inc. might not do so well as Obama wants to give Medicare, the federal health-insurance program for the elderly and disabled, authority to negotiate the price of medicines for its drug plans. Pfizer, the maker of cholesterol-lowering Lipitor, declined 1.6 percent to $18.10. Sprint Nextel Corp. may be active. The third-biggest U.S. phone company won approval from the Federal Communications Commission to combine its high-speed wireless business with Clearwire Corp., clearing the way for the first national WiMax network. The shares didn’t trade in Europe. To contact the reporters on this story: To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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