U.S. stock Futures Retreat unexpected increase in unemployment rate

The U.S. stock futures slid, indicating the market may cut a weekly meeting, after slower growth than expected in payroll and an unexpected increase in the unemployment rate dampened optimism about economic recovery.

Hewlett-Packard Co., Citigroup Inc. and Amazon.com Inc. retreated at least 1.3 percent to lead abatement among the largest U.S. companies. Kroger Co. and Safeway Inc. fell more than 1 percent each after Barclays Plc lowered the ratings of the two supermarket chains.

Futures on the Standard & Poor's 500 Index expiring this month lost 0.6 percent to 1,215.8 at 9:11 am after climbing to 0.4 percent before the jobs report. Dow Jones Industrial Average futures fell 57 points, or 0.5 percent, to 11,306.

"It is a recovery of the glaciers to the labor market," said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus, which has $ 90 billion in client assets. "Today's numbers were surprising, especially in light of the best ever figures this week. That just tells me they still have to keep a careful eye at this stage."

The Dow and the S & P 500 were ready to end a two-day rally after the Labor Department said U.S. payrolls increased by 39,000 last month, behind the median estimate of economists surveyed by us for an increase of 150,000 jobs. The unemployment rate rose to 9.8 percent from 9.6 percent.

The S & P 500 is up 19 percent from its low in July 2010 as corporate profits and improving the Federal Reserve expanded its asset purchase program to suppress interest rates and fuel the economic recovery.

Rally Arrested

Stocks rose for a second day yesterday, giving the Dow Jones industrial average its biggest rally back to back since July, as sales in U.S. of origin and retail purchases and beat estimates by Goldman Sachs Group Inc. recommended buying the banks about the prospects for an improvement in the economy. The Dow and the S & P 500 have risen more than 3 percent each so far in December.

The Dow Jones industrial average has risen in December than in any other month in the last century, according to data compiled by Bespoke Investment Group. On average, the indicator of 30 stocks has risen 1.3 percent in the month in the last 100 years, while gaining 1.5 percent and 1.7 percent in the last 50 and 20 years respectively according to the data.

Stocks fell for the first two days of this week amid concerns that the crisis of European sovereign debt spreads. The European Central Bank President Jean-Claude Trichet said yesterday the bank to delay the withdrawal of stimulus and buy more government bonds.

Grocers Ratings Cut

Kroger, the U.S. supermarket chain who had the biggest drop in a year ago after dropping the top end of its earnings forecast for the year, fell 23 cents to $ 21.40 today after Barclays Plc lowered its rating to "equal weight" from "overweight." Safeway Inc., the U.S. supermarket chain fourth-largest, lost 1.1 percent to $ 22.04 after the stock was reduced to "underweight" from "equal weight" by the broker.

Coldwater Creek Inc. fell 3.5 percent to $ 3.32 after the women's clothing retailer reported a loss in the third quarter of 12 cents per share, lower than analysts' average estimate of 17 cents in a survey.

Walter Energy Inc. sank 3.8 percent to $ 101.60 after it agreed to buy coal from western Canada to add reserves and increase production of the commodity as prices rise. Walter Power offered C $ 11.50 per share in cash or 0.114 share Walter Energy companies said today in a joint statement. The price is a 56 percent premium to the closing price of Western coal for action on November 17, the day before the two companies announced they were in exclusive talks.