Falls extend S&P 500's two-week decline

Dow Jones: 12,620.84 (-47.38) S&P 500: 1,329.47 (-8.30) Nasdaq: 2,782.31 (-46.16)US STOCKS retreated yesterday, extending a two-week slump for the Standard and Poor's 500 Index, as Greece sought additional bailout funds and a report showed that manufacturing growth in the New York region cooled.

Lowe’s Cos., the second-largest US home improvement retailer, dropped 3.6 per cent after cutting its full-year earnings forecast. NYSE Euronext tumbled 13 per cent as Nasdaq OMX Group and IntercontinentalExchange pulled their takeover bid.

US stocks fell last week as concern over Europe’s debt crisis deepened and inflation reports spurred speculation global interest rates will rise. Still, the SP 500 has advanced 5.7 per cent in 2011 after 72 per cent of the 435 companies that reported results since April 11th topped the average analyst earnings projection.

While the SP 500 has rallied 5.8 per cent since its year-to-date low on March 16th, the gains have been led by so-called defensive industries that are thought to hold up better during an economic slowdown. Healthcare companies, consumer firms that sell necessities, telephone operators and utilities have risen at least 9.9 per cent, the most among 10 industry groups in the SP 500. Financial and energy companies have been the worst performances.

Stocks also fell as a report showed that manufacturing in the New York region expanded at a slower pace than anticipated in May as the cost of raw materials surged. Lowe’s dropped 3.6 per cent to $24.84. Economic pressures and bad weather lowered sales, Lowe’s said.

NYSE Euronext tumbled 13 per cent to $35.73. Nasdaq and ICE pulled their bid for NYSE Euronext after talks with US regulators showed they would not secure anti-trust approval, clearing the path for Deutsche Boerse. NYSE Euronext agreed to be bought by the Frankfurt-based bourse on February 15th, a merger that would create the world’s largest exchange operator.

The NYSE board twice rejected a rival proposal from Nasdaq and ICE, saying the unsolicited offer would lead to too much debt and regulatory opposition.

AMR gained 4.9 per cent to $6.69, while JetBlue rose 5.6 per cent to $6.14. JPMorgan raised its recommendation for the carriers to “overweight” from “neutral”. – (Bloomberg)