GM, the largest U.S. automaker, fluctuated in pre-market trading in New York. Wells Fargo & Co. and JPMorgan Chase & Co. retreated more than 2.3 percent after ADP Employer Services reported a loss of 742,000 jobs last month. Caterpillar Inc., the world’s largest maker of construction equipment, and International Business Machines Corp. declined before reports that may show manufacturing shrank in March.

Futures on the Standard & Poor’s 500 Index expiring in June lost 1.2 percent to 785.5 as of 8:38 a.m. in New York. Dow Jones Industrial Average futures decreased 1.2 percent to 7,473 and Nasdaq-100 Index futures dropped 1.4 percent to 1,220.75. European stocks also declined, while Asian shares rose as investors speculated Japanese and South Korean automakers will benefit from the possibly bankruptcy of GM and Chrysler.

“The market is surprised by Obama’s radical solution for GM,” said Claudio Meiger, who manages about $100 million at Basel, Switzerland-based CIC Schweiz AG. “After the gains at the end of the quarter yesterday we may see some profit taking today. There a lot of volatility and the market is very news sensitive.”

U.S. stocks rose yesterday, giving the S&P 500 its biggest monthly rally since October 2002, on speculation banks have grown more eager to lend.

S&P 500

The S&P 500 has climbed 18 percent since March 9, trimming its first-quarter decline to 12 percent, as banks from Citigroup Inc. to JPMorgan Chase & Co. said they made money in the first two months of 2009 and U.S. Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets.

President Barack Obama met with U.K. Prime Minister Gordon Brown in London today before the G-20 summit with the global economy mired in its first recession since World War II.

Obama believes a quick, negotiated bankruptcy is the most likely way for GM to restructure and become competitive, people familiar with the matter said.

Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who were briefed on the GM and Chrysler situation before the president said two days ago that the automakers’ viability plans were insufficient.

Ouster

The ouster of GM and Citigroup from News Corp.’s global stock index is leading to calls for Rupert Murdoch’s company to also remove them from the 112-year-old Dow Jones Industrial Average.

GM and Citigroup were dropped from the 150-stock Global Dow after “extraordinary market conditions” pushed down the shares more than 88 percent in the past year, News Corp. said in a March 27 press release. They are among five stocks in the 30- company Dow industrials that closed below $10 this year.

Citigroup, which has received about $45 billion in government rescue funds, dropped 1.6 percent to $2.50 in German trading.

Caterpillar lost 1.6 percent to $27.50. IBM, the biggest computer-services company, slipped 0.8 percent to $96.12.

Manufacturing probably contracted further in March as the recession enters its 17th month and becomes the longest since the 1930s, the Institute for Supply Management may report at 10 a.m. New York time. The group’s factory index was probably at 36 last month compared with February’s 35.8, according to a Bloomberg News survey. Readings less than 50 signal contraction.

Construction

Construction spending probably fell in February for a fifth straight month, the Commerce Department may report, according to economists surveyed. The National Association of Realtors’ index of signed purchase agreements for homes probably stabilized in February after a 7.7 percent drop in January, according to the median estimate of 37 economists surveyed by Bloomberg News.

“The economic outlook is still gloomy,” said Marco Huwiler, a strategist at Clariden Leu AG in Zurich, which manages the equivalent of $120 billion. “Economic data and the housing market will be in focus, we haven’t seen the worst yet.”

Alcoa

Alcoa Inc., the largest U.S. aluminum producer, slid 3 percent to $7.12. Chevron, the second-largest U.S. oil company, lost 1.6 percent to $66.11.

Copper fell after China’s manufacturing shrank for an eighth straight month in March, increasing concerns that demand for the metal may decline. Crude oil declined below $49 a barrel on speculation that a government report today will show U.S. inventories rose from the highest level in more than 15 years as fuel demand slows.

Celgene Corp. sank 11 percent to $39.44. The maker of cancer drug Revlimid said it expects 2009 profit at the lower end of its previously forecast range of $2

 SOURCE: Bloomberg