April 3 (Bloomberg) -- U.S. stocks retreated for a second day as unemployment claims unexpectedly rose, consumer-loan delinquencies increased and analysts said a slowdown in business spending will hurt sales of computer equipment.
Bank of America Corp. and Wachovia Corp. fell after the American Bankers Association said late payments on car, credit- card and home-equity loans climbed to a 15-year high. Amazon.com Inc. and Target Corp. dropped after jobless benefits advanced to the highest since July 2004. Cisco Systems Inc., the world's biggest maker of computer-networking equipment, declined the most in a week after UBS AG said weaker demand in the U.S. is spreading to Europe and emerging markets.
The Standard & Poor's 500 Index lost 4.94, or 0.4 percent, to 1,362.59 at 11:07 a.m. in New York. The Dow Jones Industrial Average dropped 49.58, or 0.4 percent, to 12,556.25. The Nasdaq Composite Index fell 17.18, or 0.7 percent, to 2,344.22. Two stocks fell for every one that rose on the New York Stock Exchange.
``The unemployment numbers are further indication that we're in deceleration mode in our economy,'' Dan Veru, chief investment officer at Palisade Capital Management, which oversees about $3 billion in Fort Lee, New Jersey, said in an interview on Bloomberg Radio.
Eight of 10 industry groups in the S&P 500 retreated as the jump in delinquent loans bolstered expectations that financial firms will add to the $232 billion in credit losses and asset writedowns already reported since the beginning of last year. Benchmark equity indexes briefly pared losses after the Institute for Supply Management's service-industry index contracted less than forecast in March.
Two-Day Drop
The declines over the past two days have erased about one- fifth of the S&P 500's 3.6 percent rally on April 1, the best start to a second quarter in 70 years.
European stocks slumped as a German lender's subprime- related writedowns were double its forecast. Asian shares rose for a second day.
Bank of America, the second-largest U.S. bank, slid 51 cents to $39.79. Wachovia, the fourth-biggest, retreated 85 cents to $27.76. American Express Co., the largest U.S. credit- card lender, declined 74 cents to $45.91.
Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based American Bankers Association said today. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.
Amazon, Cisco
Amazon, the largest Internet retailer, slumped $2.86 to $74.51. Target, the second-biggest discount chain, fell 86 cents to $52.59.
Cisco lost 80 cents to $24.16 after the shares were downgraded to ``neutral'' from ``buy'' at UBS.
``Our industry checks show orders are slowing, which gives us concern'' about Cisco's third-quarter results, analysts Nikos Theodosopoulos and Saud Masud wrote in a note.
MEMC Electronic Materials Inc. retreated $6.20 to $70.19. First-quarter revenue was about $500 million, compared with the company's earlier prediction of about $560 million. MEMC said unexpected maintenance delayed production.
Merrill Lynch & Co. dropped $1.39 to $43.95. The third- largest U.S. securities firm may post a first-quarter loss of $2.75 a share because of writedowns linked to collateralized debt obligations, according to a note to clients today from Lehman Brothers Holdings Inc. analyst Roger A. Freeman.
RIM, Schering-Plough
Research In Motion Ltd., the maker of the BlackBerry e-mail phone, rallied $1.09 to $116.88. The company's forecasts exceeded analysts' estimates, signaling that sales may withstand an economic slump and competition from Apple Inc. First-quarter sales will double to as much as $2.3 billion, the company predicted yesterday. That beat the $2.01 billion average of estimates compiled by Bloomberg.
Schering-Plough Corp. gained 64 cents to $14.50 after saying yesterday it will cut 10 percent of its jobs and shut plants to save $1.5 billion annually. The stock had lost 29 percent in the three days since a panel of doctors said that Schering's cholesterol pill Vytorin shouldn't be used as an initial treatment.
The Labor Department said the number of Americans filing first-time claims for unemployment benefits unexpectedly increased by 38,000 to 407,000 in the week that ended March 29. Economists in a Bloomberg survey forecast the number would hold steady at 366,000. The number of people receiving benefits jumped by 97,000 to 2.937 million in the prior week, higher than the 2.86 million forecast by economists.
ISM Surprise
The Institute for Supply Management's non-manufacturing index, which captures almost 90 percent of the economy, rose to 49.6 from 49.3 in February. A reading of 50 is the dividing line between growth and contraction.
Federal Reserve Chairman Ben S. Bernanke acknowledged for the first time yesterday that the economy may be in a recession, while billionaire George Soros said in an interview that mortgage losses may cause the worst financial crisis since the Great Depression.
A gain in oil prices, along with advances in copper and gold, pushed energy and raw-materials producers to the top gains among 10 industry groups in the S&P 500.
Exxon Mobil Corp., the biggest U.S. energy company, added 52 cents to $89.04 after crude oil for May delivery rose 0.8 percent to $105.68 a barrel in New York. ConocoPhillips, the country's third-largest fuel producer, rose 34 cents to $79.11. Freeport-McMoRan Copper & Gold Inc. increased $1.69 to $101.42.
``I like large-cap stocks that have good international exposure,'' Giri Cherukuri, a portfolio manager at Oakbrook Investments LLC, which oversees about $1.2 billion in Lisle, Illinois, said in an interview on Bloomberg Television. ``The economy in general is slowing, obviously, but outside the financial sector and housing sector, I don't think it's as bad as some people are portraying.''
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