By Sarah Jones and Elizabeth Stanton Dec. 4 (Bloomberg) -- U.S. stock futures fell as General Motors Corp. executives considered a pre-arranged bankruptcy filing in exchange for a government bailout and Merck & Co. said profit may miss analysts’ forecasts. General Motors, the largest U.S. automaker, fell 10 percent after a person familiar with the matter said the company is exploring whether a bankruptcy negotiated with workers, creditors and lenders could avert a liquidation. Merck & Co. slipped 3.6 percent after saying a “volatile global economy” may reduce earnings. Adobe Systems Inc. lost 6.6 percent as the world’s biggest maker of graphics and Web-design software forecast sales that trailed analysts’ estimates. Futures on the Standard & Poor’s 500 Index expiring in December retreated 1.8 percent to 852.90 at 8:27 a.m. in New York after climbing as much as 0.8 percent earlier. Dow Jones Industrial Average futures declined 1.8 percent to 8,427. The S&P 500 is down 41 percent this year as credit losses and writedowns at financial firms approach $1 trillion and more economists forecast that the U.S. recession will be one of the most severe in the post-World War II era. A report from the Commerce Department at 8:30 a.m. is expected to show U.S. factory orders slid 4.5 percent in October, according to a Bloomberg survey of economists. Separate Labor Department figures may show the number of Americans filing first- time claims for unemployment benefits climbed to 540,000 last week. Stock futures declined even as the European Central Bank lowered interest rates by the most in its 10-year history, the Bank of England lowered its benchmark rate to the lowest since 1951 and traders increased bets the U.S. Federal Reserve will lower the federal funds rate target from 1 percent to at least half a percent at its next meeting on Dec. 16. Fed Fund Futures Interest-rate futures show traders put the odds of a cut to 0.50 percent at 38 percent, and the chances of a reduction to 0.25 percent at 62 percent. A week ago, the smaller reduction had odds of 64 percent vs. 36 percent for the bigger cut. General Motors fell 50 cents to $4.40. Chrysler LLC executives also are considering a pre-arranged bankruptcy filing, a person familiar with the companies’ internal discussions said. GM and Chrysler told Congress Dec. 2 that they need $11 billion in government loans just to survive the year as the auto industry slump deepens. To get the money, the companies agreed to slash payrolls, shed brands and shrink dealerships. Bankruptcy was not part of their plans. Merck said net income in 2009 may miss analysts’ expectations as it works to offset falling sales of its top- selling products with job reductions and spending cuts. The stock lost 96 cents to $25.50. Adobe dropped $1.48 to $21.06. Sales in the first quarter ending in February probably will fall to between $800 million and $850 million, Adobe said. That missed the $928.8 million average of estimates compiled by Bloomberg. The company also plans to cut 600 jobs, which amount to about 8 percent of the workforce globally as of the end of the third quarter. To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net.

Source