Stock index futures declined on Thursday as doubts about a quick economic rebound fueled a global equity selloff, while Britain's reduced rating outlook pointed to more fallout from the credit crisis.
Asian markets dipped overnight after the U.S. Federal Reserve gave a more pessimistic prognosis for economic recovery. In Europe, U.K. stocks were a top casualty as the FTSE 100 index <.FTSE> slid 2.3 percent after Standard & Poor's cut its outlook on Britain to negative from stable.
The outlook downgrade of U.K. debt is being taken pretty negatively, said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
It sets a precedent for what could start to happen to a lot of the world, given the amount of spending that's going on.
Investors were also cautious ahead of a government report on weekly jobless claims that could shed more light on the state of the labor market. The data is due at 8:30 a.m. EDT.
S&P 500 futures fell 5.40 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 shed 32 points, and Nasdaq 100 futures dipped 9.75 points.
Minutes from its April meeting showed the Fed projected the U.S. economy, the world's biggest, contracting by up to 2 percent this year with the unemployment rate rising to as high as 9.6 percent.
The Fed's view tempered hopes the recession that began in December 2007 might be abating. That optimism was behind the benchmark S&P 500 <.SPX> jumping as much as 37 percent from a 12-year low in early March.
Bank of America Corp
Former Federal Reserve Chairman Alan Greenspan said the U.S. economy and financial markets had improved, but warned that banks faced a capital shortfall, which could stall lending and obstruct a recovery, Bloomberg reported Thursday.
(Reporting by Ellis Mnyandu; editing by Jeffrey Benkoe)