US STOCKS-Futures drop before ADP jobs data; Alcoa off
* Alcoa shares fall after plan to cut output, jobs
* Bank of America confirms stake sale in Chinese bank
* ADP Employment report for December on tap
By Ellis Mnyandu
NEW YORK, Jan 7 (Reuters) - U.S. stock index futures fell on Wednesday due to caution ahead of an economic report likely to show further deterioration in the labor market.
Investors also worried that the corporate profit outlook would stay bleak for a while even as Washington pushes for a plan to revive the world's largest economy.
The ADP National Employment Report is due at 8:15 a.m. (1315 GMT), two days before the key U.S. nonfarm payrolls report for December.
Sentiment also took a knock on a revelation that India's Satyam Computer Services (SAY.N) (SATY.BO) falsely inflated earnings for years. The news sent India's main equity index SENSEX .BSESN plunging 7 percent. For details, see [ID:nSP387669].
The fraud at the major business software and back-office services company could add to investor anxieties about the integrity of the markets, said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
Another headwind, he said, was uncertainty surrounding deal making after the Financial Times reported that Dow Chemical Co (DOW.N) is prepared to miss next week's deadline to clinch the $15 billion takeover of Rohm & Haas ROH.N in an effort to raise enough cash to complete the deal without taking on too much debt. [ID:nBNG388356]
"There's so many factors battling this market, from unemployment to broken deals," said Meckler. "All investors realize the incredibly tough challenge that President-elect Barack Obama has ahead of him. There's not going to be good economic news for quite some time."
S&P 500 futures SPc1 fell 6.70 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 DJc1 fell 50 points while Nasdaq 100 NDc1 futures declined 5.75 points.
In another sign of how tough the economic picture is, Alcoa Inc (AA.N), a Dow component, said after the bell on Tuesday it would cut more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminum production in the face of the global economic downturn. [ID:nN06444898].
Alcoa shares were down 6.7 percent at $11.30 in premarket trading after closing at $12.12 on Tuesday.
Shares of Bank of America (BAC.N) slipped 1.3 percent to $14.10 before the bell after the top U.S. lender said it had raised $2.83 billion from selling part of its holding in China Construction Bank 0939.HK , a transaction that had been widely anticipated by the market.
Obama, set to be sworn in on Jan. 20, has proposed the largest U.S. infrastructure investment since the 1950s and massive tax cuts for consumers and businesses.
But it is uncertain how soon the boost will translate into an upturn in profits to sustain the market's attempted recovery since its November bear market low as job losses mount. On Tuesday the minutes of the U.S. Federal Reserve's Dec. 15-16 policy showed that authorities expected the economic outlook to be weak for some time. [ID:nN06439238]
The benchmark S&P 500 .SPX has risen 24 percent since its Nov. 21 low. U.S. stocks posted a modest advance on Tuesday as investors shrugged off more disconcerting economic data. (Editing by James Dalgleish)
