July 18 (Bloomberg) -- U.S. stocks fell as lower-than- expected earnings from Citigroup Inc., the nation's biggest financial-services company, weighed on financial shares and pushed the Standard & Poor's 500 Index below a four-year high.

Mylan Laboratories Inc. had the worst performance in the benchmark after billionaire Carl Icahn, the company's biggest investor, dropped his $5.39 billion offer to buy the company and said he plans to sell 26.3 million shares.

``We're near the end'' of a bull market, said Ken Tower, chief market strategist at CyberTrader Inc., a unit of Charles Schwab Corp. ``Earnings growth is slowing. Economic growth is slowing,'' he said from Princeton, New Jersey.

The S&P 500 headed toward its first decline in eight days. It dropped 5.53, or 0.5 percent, to 1222.39 as of 3:54 p.m. in New York, led by financial companies. The Dow Jones Industrial Average fell 58.44, or 0.6 percent, to 10,582.39. The Nasdaq Composite Index slid 9.06, or 0.4 percent, to 2147.72.

Bond yields rose, further weighing on stocks, amid speculation that Federal Reserve Chairman Alan Greenspan will reiterate the central bank's plan to keep lifting interest rates at a ``measured'' pace. The yield on the 10-year Treasury note rose 5 basis points to 4.22 percent, the highest since May 12. Higher rates give investors a reason to favor bonds over stocks.

Profit growth among S&P 500 companies probably slowed to 7.1 percent in the second period from 17 percent in the first, according to a Bloomberg analysis of Thomson Financial data. That would mark the slowest quarterly growth in three years. Economic expansion is expected to cool to 3.6 percent this year following 4.4 percent growth in 2004.

Earnings Reports

About 150 S&P 500 companies are scheduled to report results this week including Intel Corp., the world's No. 1 maker of semiconductors, and JPMorgan Chase & Co., the No. 3 U.S. bank.

Investors will also look to comments from Greenspan on July 20-21 in what may be his last appearance before Congress as chairman of the Fed.

Almost seven stocks fell for every four that rose on the New York Stock Exchange. Some 1.1 billion shares changed hands on the Big Board, 13 percent less than the same time a week ago.

Citigroup slid $1.26, or 2.7 percent, to $45.16 for the biggest drop in the Dow average. The bank had second-quarter earnings of 97 cents a share, less than the average analyst estimate of $1.02 in a Thomson survey. Separately, Citigroup denied a CNBC report that Sanford Weill was stepping down as chairman.

Bank of America, MBNA

Bank of America Corp. and MBNA Corp. dropped even after reporting better-than-expected earnings.

Bank of America, the No. 2 U.S. bank, slipped 74 cents to $45.24. The company said second-quarter net income excluding some items was $1.08 a share, more than the $1.01 average analyst estimate in a Thomson poll even after the bank reported profit was hurt by a 77 percent slump in revenue from fixed- income trading.

MBNA, which agreed in June to be purchased by Bank of America for $35 billion, fell 38 cents to $25.84. The company reported profit of 50 cents a share. Analysts expected 49 cents.

A gauge of financial stocks, which makes up a fifth of the S&P 500, lost 0.9 percent and was the biggest drag on the benchmark among 10 industry groups. Second-quarter earnings for the companies probably increased 0.9 percent, based on Bloomberg News analysis of Thomson data.

Mylan Slumps

Mylan, the biggest U.S.-based generic-drugmaker, slumped $1, or 5.2 percent, to $18.40 and headed for its steepest decline in almost a year. Icahn's decision came after U.S. regulators opened an investigation of a Mylan pain patch that was linked to 120 deaths.

Icahn will make a profit of at least 14 percent on his 26.3 million shares as reported in a Nov. 1 filing. He may gain $62.7 million on the 24.7 million shares Mylan said yesterday it would probably buy, plus $1.6 million in dividends paid July 15 after Mylan doubled the quarterly rate.

The S&P 500 has climbed 7.5 percent since reaching its 2005 low on April 20, a rally that may not be over, according to Prudential Equity Group LLC's Edward Keon. The strategist raised his year-end S&P 500 forecast to 1340 from 1300, making him the most optimistic among 15 strategists surveyed by Bloomberg.

``Given how cheap stocks look compared to bonds and real estate,'' the new forecast was still ``fairly conservative,'' the New York-based Keon said in an interview.

Acquisitions helped lift Maytag Corp. and Stanley Works.

Maytag climbed $2.11, or 14 percent, to $17.56 for the best performance in the S&P 500. The appliance maker was offered $1.35 billion in cash and stock by Whirlpool Corp., topping bids from China's Haier Group and a group led by Ripplewood Holdings LLC. Whirlpool, the No. 1 U.S. home-appliance maker, bid $17 a share. Whirlpool rose $3.06 to $73.05.

Stanley Works

Stanley Works rallied $4.59, or 9.8 percent, to $51.31. The biggest U.S. hand-tool producer said it agreed to buy Facom Tools from Fimalac SA for 410 million euros in cash ($494.1 million), almost doubling the size of its European operations.

Geron Corp. jumped $2.29 to $10.89. The developer of cell- based therapies for cancer said it agreed to collaborate with Merck & Co. on developing a cancer vaccine in exchange for certain payments and an equity investment by Merck. Financial terms weren't disclosed.

Eaton Corp. climbed $4.24 to $66.28. The No. 2 maker of hydraulic equipment boosted its 2005 profit forecast to $5.20 to $5.40 a share, excluding some items. Analysts expected $5.24, according to Thomson.

Schwab

Charles Schwab Corp. jumped 60 cents to $13.34. The world's biggest discount brokerage by assets reported second-quarter profit of 14 cents a share, exceeding the 13-cent average analyst estimate in a Thomson survey.

Guidant Corp., the heart-device maker being bought by Johnson & Johnson, slumped $2.24 to $67.17. The company said it is telling doctors that nine models of its cardiac pacemakers may need to be replaced after Guidant received reports of 69 devices that failed. U.S. regulators may classify the action a recall, Guidant said. Johnson & Johnson, the world's largest maker of medical devices, fell 32 cents to $64.71.

To contact the reporter on this story: Ari Levy in New York at alevy5@bloomberg.net.

Last Updated: July 18, 2005 15:56 EDT