By Michael P. Regan Oct. 2 (Bloomberg) -- U.S. stock-index futures extended declines after the government reported a bigger-than-estimated decrease in jobs last month, spurring concern higher unemployment will stifle an economic recovery. Futures on the Standard & Poor’s 500 Index expiring in December slid 1 percent to 1,017.5 at 8:31 a.m. in New York after the Labor Department said employers cut 263,000 jobs in September, more than the 175,000 median estimate of economists in a Bloomberg survey. The S&P 500 has retreated 1.4 percent this week on concern the seven-month rally in equities has outpaced prospects for an economic recovery. U.S. stocks yesterday tumbled the most in three months as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast. The S&P 500 jumped almost 15 percent in the July-to- September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent surge in the first half of 1975. The Dow also rose 15 percent in the third quarter and gained 29 percent in March through September, its steepest two-quarter advance since 1986. The rally has pushed the S&P 500 up as much as 58 percent from a 12-year low in March and sent its price-to-earnings valuations last month to the highest levels since 2004. The measure is valued at about 19.4 times its companies’ reported operating profits, according to weekly Bloomberg data. The U.S. recovery will falter as banks continue to curb lending to small companies, said Meredith Whitney, whose 2007 prediction that Citigroup Inc. would cut its dividend triggered a plunge in the bank’s stock.

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