(By Salman - iStockAnalyst Writer)US Stock futures edged lower on Wednesday on concern declining corporate profits will lead to cost reductions and massive layoffs. Investors remained worried as disappointing earnings and job cuts are expected to hit economic growth and consumer spending badly.

At 8:36 am ET, Standard & Poor's 500 Index futures expiring in December retreated 26.70 points to 932.60. Dow Jones Industrial Average futures fell 200 points to 8835. Nasdaq Composite Index futures slipped 19.75 points to 1272.75.

Third largest US drug maker, Merck reported that its third-quarter net income dropped 28% to $1.09 billion, or 51 cents a share, from $1.53 billion, or 70 cents, a year earlier. Revenue fell to $5.94 billion from $6.07 billion. The company said excluding items, it would have earned 80 cents a share. Merck also forecast full-year profit excluding non-recurring items of $3.28 to $3.32 a share. Analyst forecast by Factset had forecast the company to earn 79 cents a share in the third quarter and $3.28 for the year. The company also announced that it will be reducing its headcount by 12% or 7,200 employees by 2011.

Charlotte, N.C.-based Wachovia bank (WB), which has been acquired by Wells Fargo (WFC), reported a loss of $23.89 billion, or $11.18 per share, excluding impairment and expenses, which compares with net income of $1.62 billion, or 85 cents per share, in the same period a year ago. Analysts polled by Thomson Reuters were expecting earnings of 2 cents per share. Wells Fargo's Chief Financial Officer Howard Atkins said "We believe that it was prudent for Wachovia to put these losses behind them".

Boeing Co. (BA), announced a drop of 38% in third quarter profits in its earnings report. Net income fell to $695 million or 96 cents a share, from $1.11 billion, or $1.44 a share, a year ago. Revenue declined 7.4% to $15.3 billion

On Wednesday, McDonald's Corp. (MCD) announced that its third-quarter profit climbed to $1.19 billion, or $1.05 a share, compared to $1.07 billion, or 89 cents, a year ago. Revenue rose to $6.27 billion from $5.9 billion. Analysts surveyed by FactSet Research expected the company to earn 97 cents a share on sales of $6.22 billion.

AT&T (T) posted net profit of $3.23 billion, or 55 cents a share compared to $3.06 billion or 50 cents a share a year ago. Revenue rose 4% to $31.3 billion.

Cupertino, California based Apple (AAPL) rose over 9% in Frankfurt. On Tuesday, iPhone maker reported a 26% jump in the profit; way above the analyst estimates.Net income for the fourth quarter rose to $1.14 billion, or $1.26 a share, on revenue of $7.9 billion, up from $904 million, or $1.01 a share, on $6.22 billion in sales in the same period a year ago. Analysts polled by FactSet Research had forecast Apple to earn $1.10 a share on revenue of $8.02 billion.

Sunnyvale, California based Internet giant Yahoo Inc. (YHOO) climbed over 4% in European trade. On Tuesday, the company reported a 64% drop in its profit in latest quarter. Third-quarter net income fell to $54.3 million or 4 cents a share, from $151.3 million, or 11 cents, a year ago. Net revenue rose 3% to $1.33 billion. Analysts surveyed by FactSet Research were looking for earnings of 8 cents a share for quarter, and $1.37 billion in net revenue. Yahoo President Sue Decker said that the company's overall sales of display advertising grew only 3%. The company also announced to reduce the headcount by 10%.

Lending rates continued to ease further. According to the British Bankers' Association London interbank offered rate or LIBOR dropped 16 basis points to 1.12% on Wednesday. The three- month rate dropped for an eighth straight day, to 3.54%. The Libor-OIS spread fell 250 basis points, the lowest level in three weeks.
European markets were trading deep in red in afternoon trade. At 13:30 pm, London time, UK FTSE and DAX retreated 3.92% and 3.99% respectively while French CAC shrank 4.36%.

Among Asian stocks, the Nikkei 225 finished down 631.56 points or 6.79% at 8,674.69 while Hang Seng Index declined 774.57 or 5.15% to settle at 14,266.60.

Dollar climbed higher against major currencies before the opening bell on Wednesday.

Disclosure: Author does not own any of the stocks discussed here.