Bloomberg U.S. Markets Wrap: Stocks Drop as Banks Fall, Treasuries Slump

May 7 (Bloomberg) -- U.S. stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. Treasury 30-year bonds fell the most since February as investors demanded higher-than-forecast yields at an auction of $14 billion of the securities.

Wells Fargo & Co. and KeyCorp lost more than 7.7 percent. AT&T Inc. and Verizon Communications Inc. tumbled at least 2.9 percent after JPMorgan Chase & Co. downgraded the shares on concern over slowing subscriber growth and pricing pressures. Symantec Corp., the biggest maker of security software, plunged 15 percent for the biggest loss in the Standard & Poor’s 500 Index after forecasting sales below analysts’ estimates.

“We just came a long way off of the idea of the world coming to an end and at some point we’d be getting a pullback,” said Michael Holland, chairman of New York-based Holland & Co. LLC, which oversees assets in excess of $4 billion. “The market has been hoping for less uncertainty. It’s not clear if the results of the stress tests are giving us that.”

The S&P 500, which has risen 34 percent from a 12-year-low in March, slid 1.3 percent to 907.39 at 4:06 p.m. in New York. The Dow Jones Industrial Average decreased 102.43 points, or 1.2 percent, to 8,409.85. The benchmark 30-year bond yield climbed 18 basis points, 0.18 percentage point, to 4.28 percent. Three stocks fell for each rising on the New York Stock Exchange.

A gauge of 75 technology companies, which accounts for 17 percent of the S&P 500, slumped 3.2 percent today and was the biggest drag on the index. The group has had the biggest advance among 10 industries this year, rising more than 15 percent. The S&P 500 has added less than 0.5 percent in 2009.

Early Gains Erased

The S&P 500 yesterday climbed to the highest since January as investors speculated banks don’t need as much capital as had been projected and a report showed employers cut fewer jobs than economists estimated. The index this week erased its loss for 2009 on expectations the global recession is easing.

Benchmark indexes opened higher today after Treasury Secretary Timothy Geithner said results of bank stress tests will be reassuring to investors and a government report showed the worst of the nation’s job cuts may be over.

Treasury 30-year bonds fell the most since February as investors demanded higher-than-forecast yields at today’s auction of $14 billion of the securities with the U.S. slated to sell a record amount of debt this year. more...