Bloomberg U.S. Stocks Fall Most Since January on European Debt Downgrades

May 1 (Bloomberg) -- U.S. stocks fell, breaking the Dow Jones Industrial Average’s longest winning streak since 2004, after credit downgrades for Greece, Portugal and Spain spurred concern that global economic growth will slow and prosecutors considered filing fraud charges against Goldman Sachs Group Inc.

Banks dropped the most in the Standard & Poor’s 500 Index this week as the Justice Department scrutinized Goldman Sachs, which was sued by securities regulators on April 16. Goldman Sachs lost 7.8 percent, completing its biggest monthly retreat since Lehman Brothers Holdings Inc. filed for bankruptcy in 2008. Transocean Ltd. and Halliburton Co. fell more than 12 percent as an oil spill in the Gulf of Mexico worsened.

The S&P 500 slumped 2.5 percent to 1,186.69. The Dow lost 195.67 points, or 1.8 percent, to 11,008.61, its first weekly decline since February. Both posted the largest weekly losses since January, when President Barack Obama proposed bank curbs.

“People are now questioning if maybe the worst is not over for Greece and Portugal,” said Mark Bronzo, an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “The rationale is: The sovereign risk will weigh on Europe and the global economy. It’s another unknown for the stock market.”

Greek Prime Minister George Papandreou said the country’s survival was at stake in talks to win a potential $159 billion European Union-led bailout in exchange for budget cuts denounced by unions as “savage.” Investors demanded 5.95 percentage points more to buy Greek 10-year bonds than German bunds amid speculation the nation will default. more...