By Whitney Kisling Dec. 9 (Bloomberg) -- U.S. stocks fell, halting a two-day advance, after companies from FedEx Corp. to Danaher Corp. forecast earnings that disappointed investors as the deepening recession crimps sales. FedEx, the second-biggest U.S. package-shipping company, lost 12 percent after projecting profit below analysts’ estimates amid a “significantly weaker” economy. Danaher, maker of Craftsman tools, slid 5.1 percent. Eight of 10 industry groups in the Standard & Poor’s 500 Index retreated a day after the benchmark gauge of U.S. equities extended its gain from an 11-year low last month to 21 percent. “You’re going to have to get used to this for the next three months; you’re going to see lowering of guidance,” said Robert Lutts, president and chief investment officer at Cabot Money Management, which oversees $400 million in Boston. “This is the real economy.” The S&P 500 lost 0.9 percent to 901.96 at 10:08 a.m. in New York. The Dow Jones Industrial Average declined 128.08 points, or 1.4 percent, to 8,806.1 and Nasdaq Composite Index slipped 0.2 percent to 1,569.04. Three stocks fell for every two that rose on the New York Stock Exchange. The S&P 500 yesterday marked a technical end to the 14- month bear market as President-elect Barack Obama pledged the biggest public-works spending package since the 1950s. The benchmark index is down 39 percent in 2008 after the collapse of subprime mortgages curbed earnings for five straight quarters. European shares rose for a second day and Asian stocks climbed for a third, led by commodity producers and shipping lines, on expectations stimulus plans from the U.S. to India will buoy the global economy. $1 Trillion More than $31 trillion has been erased from the value of global equities this year, while debt losses and writedowns at the world’s largest lenders and insurers approach $1 trillion. Stocks will climb in 2009 in the face of falling earnings and a slowdown in economic growth because of cheap valuations, according to strategists at Credit Suisse Group AG, Deutsche Bank AG and Merrill Lynch & Co. The S&P 500 may rise to 1,050 by the end of 2009 from yesterday’s close price of 909.7, a team of Credit Suisse strategists wrote in a note today. Goldman Sachs Group Inc. chief investment strategist David Kostin projected a 21 percent gain by the end of next year as the economy stabilizes. FedEx fell 12 percent to $65.86 after saying annual profit may be as much as one-third lower than analysts expected. United Parcel Service Inc., FedEx’s larger rival, fell 7.2 percent to $54.43. Con-Way, Danaher Con-way Inc., the second-biggest U.S. trucker, reduced its full-year 2008 earnings forecast to as much as 20 percent less than analysts’ average estimate as freight demand fell to 2003 levels. The company also cut 1,450 jobs. The shares slid 18 percent to $21.26, the lowest value since September 2001. Danaher Corp. fell 5.1 percent to $49.29. The company said fourth-quarter profit will be lower than previously forecast. It will close 13 factories and cut 1,700 jobs because of the deteriorating economy. Fewer Americans signed contracts to buy previously owned homes in October, signaling the housing slump will extend into a fourth year. The index of signed purchase agreements, or pending home resales, fell a less-than-forecast 0.7 percent to 88.9 from a revised 89.5 in September, according to a report from the National Association of Realtors. Gains in the South and Northeast offset weakness in the West and Midwest. GM, Ford General Motors Corp., the largest U.S. automaker whose shares surged 21 percent yesterday, dropped 7.9 percent to $4.54. Congressional Democrats sent President George W. Bush a draft proposal for a $15 billion, short-term aid package for U.S. automakers. Some Senate Republicans yesterday expressed doubt about the plan, which is to be voted on in a special session this week. Ford Motor Co., the second-biggest U.S.-based automaker, declined 8.3 percent to $3.10. The U.S. government may end up holding stakes in GM, Ford and Chrysler LLC if Congress and the White House reach agreement. Under the proposed rescue, details of which are still being discussed, the Treasury would get warrants for stock equivalent to 20 percent of any government loans. With GM seeking as much as $10 billion and valued at $3 billion, the government may become the biggest shareholder. The legislation isn’t clear on what kind of holding the government would take, leaving it the option of preferred, common, voting or non-voting shares. To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net.

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