Oct. 30 (Bloomberg) -- U.S. stocks fell for the first time in three days on concern the economy is weakening after Procter & Gamble Co.'s profit forecast trailed analysts' estimates, consumer confidence dropped to the lowest since 2005 and home prices declined.

Exxon Mobil Corp., Chevron Corp. and ConocoPhillips dragged energy shares to their first loss in six days after oil retreated from a record. Procter & Gamble, the biggest U.S. consumer-goods maker, tumbled the most since February. Citigroup Inc. led financial shares lower as the Federal Reserve began a two-day meeting to set interest rates.

The Standard & Poor's 500 Index lost 9.96, or 0.7 percent, to 1,531.02. The Dow Jones Industrial Average fell 77.79, or 0.6 percent, to 13,792.47. The Nasdaq Composite Index slipped 0.73 to 2,816.71. About five stocks declined for every three that rose on the New York Stock Exchange.

``Economic growth has slowed and a big part of that has been the housing market,'' said Craig Hester, who oversees $1.5 billion as chief executive officer of Hester Capital Management in Austin, Texas. ``If the economy would really fall off a cliff, you have earnings risk.''

Consumer confidence fell more than forecast as the housing slump and higher fuel bills threatened to reduce spending. Home values in 20 U.S. metropolitan areas slid 4.4 percent in the 12 months that ended in August, according to the S&P/Case-Shiller home-price index.

The decline in U.S. stocks followed losses around the world. Europe's Dow Jones Stoxx 600 Index retreated 0.4 percent, its first decrease in four days, while drops in Japan, South Korea and India sent a benchmark for Asian shares down from a record.

The benchmark gauge of U.S. stock-market volatility rose as traders increased bets tomorrow's interest rate decision will spur bigger price swings in the next three weeks.

P&G, Exxon

P&G lost $2.88, or 4 percent, to $68.95. The company forecast full-year profit that trailed analysts' estimates on slowing U.S. consumer spending and higher commodity expenses.

Energy companies in the S&P 500 lost 3 percent, the most among 10 industries. Exxon, the world's largest oil company, fell $2.47 to $91.14. Chevron, the second-biggest U.S. crude producer, dropped $2.80 to $90.08. ConocoPhillips retreated $1.91 to $82.72.

Crude oil for December delivery fell 3.4 percent from a record to settle at $90.38 a barrel in New York after Goldman Sachs Group Inc., the bank that said in July that oil may reach $95, told clients it's ``time to take profits.''

Citigroup, the biggest U.S. bank, lost 58 cents to $42.11.

Merrill, U.S. Steel

Merrill Lynch & Co. fell $1.86 to $65.56. Stan O'Neal was ousted as chairman and chief executive officer of the world's largest brokerage less than a week after reporting the biggest quarterly loss in the firm's 93-year history. The firm didn't name a new CEO.

U.S. Steel tumbled $7.88, or 7 percent, to $104.62. Third- quarter profit slumped 35 percent to $269 million, or $2.27 a share, after lower demand from U.S. homebuilders and cutbacks by automakers such as Ford Motor Co. curbed North American demand for sheet steel.

Qwest Communications International Inc. dropped $1.12, or 14 percent, to $7.06. The local phone carrier in 14 western U.S. states reported sales and profit that missed analysts' estimates as Internet subscriptions slowed.

Shares of raw-materials producers in the S&P 500 lost 2.2 percent as a group after metals prices retreated. Gold fell from a 27-year high as the dollar rebounded, reducing the appeal of the precious metal as an alternative investment. Copper dropped on concern the housing slump will continue to reduce demand in the U.S., the second-largest consumer of the metal.

Freeport, Newmont

Freeport-McMoRan Copper & Gold Inc., the world's second- largest producer of copper, slipped $3.85 to $114.01. Newmont Mining Corp., the world's second-biggest gold miner, fell $1.23 to $46.44.

Pitney Bowes Inc. tumbled the most since October 2000, losing $7.06, or 15 percent, to $39.93. The world's largest maker of postal meters reported an unexpected decline in third-quarter profit as weaker demand from financial firms hurt sales of equipment, software and printing supplies.

Technology Shares Gain

Technology companies were the only group to advance among 10 industries in the S&P 500.

Nvidia Corp. climbed $1.23, or 3.7 percent, to $34.82. Deutsche Bank Securities said it expects a ``strong'' third quarter for the world's second-largest producer of computer- graphics chips after it gained market share.

R.R. Donnelley & Sons Co. added $2.39, or 6.4 percent, to $39.90, the second-steepest gain in the S&P 500. The largest North American printer said third-quarter earnings gained 6.3 percent on revenue from book production and acquisitions. The company also raised its full-year profit forecast.

Colgate-Palmolive Co. climbed $1 to $75.26. The world's largest maker of toothpaste said third-quarter profit increased on international sales and the weaker dollar.

General Motors Corp. gained 26 cents to $38.22. Chief Executive Officer Rick Wagoner said the weakening U.S. dollar should aid the company's revenue as it expands auto sales outside the U.S. to more than 60 percent of global volume. UBS Investment Bank raised its recommendation for shares of the largest U.S. automaker to ``buy'' from ``sell.''

Conference Board

The Conference Board's index of consumer confidence dropped to 95.6 from a revised 99.5 in September, below the 99 expected by economists in a Bloomberg survey. Consumer spending accounts for about two-thirds of the U.S. economy.

``Near-term, you have to be concerned,'' said John Carey, a portfolio manager at Pioneer Investment Management in Boston, which manages about $82 billion in U.S. assets. ``I can't believe there won't be an effect from the housing sector on consumer spending, given how people were borrowing against the equity in their homes to make bigger purchases.''

The Federal Reserve ends a two-day meeting tomorrow and will announce a decision on interest rates at 2:15 p.m. Interest-rate futures on the Chicago Board of Trade imply 94 percent odds policy makers will reduce their benchmark interest rate by 0.25 point to 4.5 percent. Policy makers shifted from 5.25 percent last month, prompting a 3.7 percent rise in the S&P 500 since then.

The Chicago Board Options Exchange Volatility Index increased 6 percent to 21.07, the biggest gain since Oct. 19. Higher readings in the so-called VIX, derived from prices paid for S&P 500 options, indicate traders expect bigger share-price swings in the next 30 days.

The Russell 2000 Index, a benchmark for companies with a median market value of $657 million, dropped 0.7 percent to 816.15 today. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 0.6 percent to 15,482.01. Based on its decline, the value of stocks decreased by $124 billion.

Chevron Corp.  (CVX US)
Colgate-Palmolive Co. (CL US)
ConocoPhillips (COP US)
Exxon Mobil Corp. (XOM US)
Freeport-McMoRan Copper & Gold Inc. (FCX US)
General Motors Corp. (GM US)
Merrill Lynch & Co. (MER US)
Newmont Mining Corp. (NEM US)
Nvidia Corp. (NVDA US)
Pitney Bowes Inc. (PBI US)
Procter & Gamble Co. (PG US)
Qwest Communications International Inc. (Q US)
R.R. Donnelley & Sons Co. (RRD US)
U.S. Steel Corp. (X US)

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

Last Updated: October 30, 2007 17:58 EDT