July 2 (Bloomberg) -- U.S. stock-index futures extended declines after the government reported more job losses than economists had estimated in June, adding to concern that rising unemployment will prolong the recession. Futures on the Standard & Poor’s 500 Index expiring in September slid 0.9 percent to 910.9 at 8:32 a.m. in New York after the Labor Department said payrolls shrank by 467,000 jobs last month, topping the 367,000 average estimate in a Bloomberg survey of economists. Dow Jones Industrial Average futures retreated 1 percent to 8,361. The second-quarter earnings season will kick off next week with Alcoa Inc., the largest U.S. aluminum producer, reporting results on July 8. Analysts estimate profits in the S&P 500 declined 34 percent in the second quarter and will slump 22 percent on average in the third, before rebounding 62 percent in the final three-month period, according to Bloomberg data. Benchmark indexes advanced yesterday, adding to gains from the S&P 500’s best quarter since 1998, as improving gauges of manufacturing and home sales added to optimism the worst of the recession is over. The steepest quarterly rally in value stocks is a bearish sign to some of the largest money managers, who say it shows the equity market has relied on companies with the worst finances to fuel its rebound. Money-losing companies in the MSCI World Value Index with the most debt climbed an average of 38 percent last quarter, compared with a 20 percent gain for the MSCI World Index, according to data compiled by Bloomberg. That pushed value stocks, or those trading at the lowest level relative to their earnings or assets, in the index up 22 percent, the biggest increase since at least 1995. Gains will be harder to come by as investors search for profit growth to justify the 41 percent rally in the MSCI World since March 9, according to James Dunigan of PNC Financial Services Group Inc.

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