Sept. 4 (Bloomberg) -- U.S. stocks fell a fourth day, the longest stretch of losses since January, after rising jobless claims heightened concern that the economic slump is worsening and a decline in oil sent energy producers lower.

Caterpillar Inc., Boeing Co. and United Technologies Corp. retreated as much as 5.7 percent after the number of Americans continuing to collect unemployment benefits reached a five-year high. Exxon Mobil Corp. and Chevron Corp. contributed the most to the 1.7 percent drop in energy shares. Ciena Corp. plunged 24 percent after saying telephone and cable-television companies are slowing equipment purchases.

The Standard & Poor's 500 Index slipped 22.58 points, or 1.8 percent, to 1,252.40 at 11:08 a.m. in New York, sinking to lowest level in a month. The Dow Jones Industrial Average lost 229.60, or 2 percent, to 11,303.28. The Nasdaq Composite Index decreased 43.68, or 1.9 percent, to 2,290.05. More than 10 stocks fell for each that rose on the New York Stock Exchange.

``If you look at the data we have on the U.S. and global economy, things are only getting worse and that leads me to believe that demand is going to slow down and slow down pretty quickly,'' Diane Garnick, a New York-based investment strategist at Invesco Ltd., which manages more than $500 billion, told Bloomberg Radio.

The S&P 500 has lost 15 percent in 2008 as subprime-related losses at global banks climbed above $500 billion and the U.S. economy teetered on the brink of a recession. The index has still rebounded 3.1 percent from the almost three-year low set on July 15 as oil tumbled more than 20 percent.

Business Slowdown

Stocks dropped yesterday after the Federal Reserve said business across most of the U.S. was ``slow'' last month as the housing market weakened. Almost all of the Fed's districts reported pressure to raise prices because of higher commodity costs, according to the central bank's Beige Book report.

Caterpillar fell 5.7 percent to $63.88, Boeing retreated 3.9 percent to $63.48 and United Technologies lost 3 percent to $65.41. The Labor Department said the number of Americans staying on jobless rolls rose to 3.435 million, the highest since November 2003, in the week ended Aug. 23. First-time claims for unemployment benefits increased by 15,000 to 444,000 last week.

Boeing also dropped after its largest union rejected a contract offer, giving the world's largest planemaker 48 hours to revise it and avert a strike that may further delay the 787 Dreamliner.

Energy companies in the S&P 500 decreased. Exxon fell 1.2 percent to $77.09, and Chevron lost 1.8 percent to $82.65.

Crude fell 1.1 percent to $108.15 a barrel in New York after the government said U.S. inventories of natural gas, a competing fuel, rose last week. Oil has tumbled 27 percent from a July record of $147.27 a barrel.

Wilbur Ross on Oil

``Given that the whole world is slowing down in terms of economic growth, that's not the environment that would make demand sufficiently high to push oil to a big price,'' billionaire investor Wilbur Ross said during a Bloomberg Television interview in New York. ``There had been a lot of speculation in that market. It was not supply-demand driven.''

Ciena tumbled the most since August 2004, losing $4.10 to $13.33. Telephone and cable-television companies are delaying orders due to ``their guarded approach to capital expenditures given the uncertain macroeconomic environment,'' Ciena said. Fourth-quarter revenue will be $210 million at most, the company said. Analysts estimated $262.2 million on average.

Legg Mason Inc. led financial shares lower with an 9.2 percent decline to $43.03 as Credit Suisse Group AG advised selling the asset manager. The company with stock funds managed by Bill Miller will likely report lower-than-estimated earnings as investors withdraw their money, Credit Suisse analysts said.

`Financial Tsunami'

The S&P 500 Financials Index retreated 2.4 percent. Lehman Brothers Holdings Inc. fell 5.8 percent to $15.95.

The U.S. government needs to start using more of its money to support markets to stem a burgeoning ``financial tsunami,'' according to Bill Gross, manager of the biggest bond fund.

``Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami,'' Gross, co-chief investment officer of Newport Beach, California- based Pacific Investment Management Co., said in commentary posted on the firm's Web site today. ``If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury.''

Service Industries Rebound

The S&P 500 briefly pared its retreat after the Institute for Supply Management's non-manufacturing index, which captures almost 90 percent of the economy, rose to 50.6 in August. Economists projected 49.5, which would have marked the third consecutive month of contraction.

Terex Corp. lost 18 percent to $38.83 for the steepest drop since 2002. The world's third-largest maker of construction equipment said profit and sales this year will be less than previously forecast on ``continued market softening'' in the U.S. and Europe.

U.S. Steel Corp. fell 1.2 percent to $117.39, the lowest price since March. Goldman Sachs Group Inc. cut its rating on steelmakers to ``neutral'' from ``attractive,'' citing weakening economic growth around the world and the strengthening dollar.

Hovnanian Enterprises Inc. slumped the most in two weeks, losing 7.1 percent to $7.20. New Jersey's biggest homebuilder reported its eighth consecutive quarterly loss after nine years of gains, as buyers found it more difficult to secure financing.

High Valuations

The S&P 500 has lost 2.3 percent this week. The benchmark index for American equities is valued at 25.5 times profits over the last 12 months after climbing to a five-year high of 26.2 in August. The last time the average multiple rose above 25 times earnings, the S&P 500 fell 38 percent.

Wal-Mart Stores Inc. rose 1.5 percent to $60.66 for a third day of gains. The world's largest retailer said sales increased 3 percent in August, beating its forecast after price cuts on groceries, back-to-school supplies and consumer electronics drew shoppers.

Navistar International Corp. jumped 12 percent to $60.34. The world's fourth-largest truckmaker reported more than twice the quarterly profit that analysts estimated and boosted its full-year forecast, citing military revenue and demand for fuel- efficient heavy trucks.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: September 4, 2008 11:12 EDT