Stock futures fall on gloomy outlooks

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By Ellis Mnyandu

NEW YORK (Reuters) - Stock index futures fell on Wednesday as disappointing outlooks from companies including luxury jeweler Tiffany & Co and farm equipment maker Deere & Co heightened fears about the world economic slowdown.

Adding to nervousness, China announced its biggest interest rate cut in 11 years to help cushion slowing growth and Toyota <7203.T> has had its top-notch credit ratings cut for the first time in a decade.

There was also caution before a deluge of economic data, including readings on weekly jobless claims, October durable goods and November consumer sentiment.

Analysts said as the market had rallied strongly on Friday and on Monday, there remained a sense that news on the economy was likely to turn even more gloomier, necessitating the need to take profits off the table.

"Whenever you get an anticipatory rally, with people buying with the idea that eventually things will be better, that sorts of meets up with reality, periodically," said Rick Meckler, president of LibertyView Capital Management in New York.

"Things aren't improving that quickly. There's definitely going to be some profit-taking by those who invested a few days back."

S&P 500 futures fell 18 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures declined 145 points, and Nasdaq 100 shed 3 points.

The diminishing appetite for riskier assets had stock markets in the red in Europe. Asia ended mixed overnight, but sentiment in Japan took a jolt on Toyota <7203.T> news.

Fitch Ratings slashed Toyota's long-term foreign and local debt ratings to AA from AAA, with a negative outlook, saying the company needed to review its global investments, product mix and speed of expansion to address the challenges it faces.

The news on Toyota comes just as investors fret about the fate of U.S. automakers, including General Motors Corp , whose executives warned of calamity if Washington did not accede to their pleas for a $25 billion bailout.

China slashed interest rates on Wednesday for the fourth time since mid-September, dramatically stepping up the pace of monetary easing to cushion a slowdown from a rapid pace in the world's fourth-largest economy.

Tiffany shares slid 2.8 percent to $20.25 before the bell after the company forecast a tough selling climate ahead.

Deere, the world's biggest farm equipment maker, posted a lower fourth-quarter net profit, hurt by faltering commercial and consumer demand, and weakness in its financial services arm. Looking ahead, it forecast a lower 2009 profit.

Also trash hauler Waste Management warned of further deterioration in fourth-quarter results.

Jobless claims are due at 8:30 a.m., along with data on durable goods, and October personal income and spending. Reports on November consumer sentiment are due at 9: 55 a.m. and October new home sales and 10 a.m.

In Tuesday's trading, the Dow and S&P 500 ended higher on hopes that Federal Reserve's $800 billion credit market rescue package could loosen up lending for consumers. But the Nasdaq slid as technology stocks fell on concerns about slumping consumer and business spending.

(Editing by Kenneth Barry)

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