March 27 (Bloomberg) -- U.S. stocks dropped the most in a week as concern that profit growth will weaken at financial and technology companies overshadowed a bigger-than-forecast gain in consumer spending.

Oracle Corp., the world's third-largest software company, tumbled the most since November on revenue that trailed analysts' estimates. Google Inc. slid after the most popular search engine received fewer ad clicks last month. Lehman Brothers Holdings Inc. lost 9 percent as options traders increased bearish bets on the biggest U.S. underwriter of mortgage bonds, while Bank of America Corp. and JPMorgan Chase & Co. fell on reduced earnings estimates for large banks.

``There are a lot of unknowns in the financial sector which I think could be adding to the economic headwinds that we're going to be facing for the next 12 months,'' Kevin Divney, a portfolio manager at Putnam Investments in Boston, which manages $190 billion, said in an interview with Bloomberg Television.

The Standard & Poor's 500 Index slipped 15.37 points, or 1.2 percent, to 1,325.76. The Dow Jones Industrial Average lost 120.4, or 1 percent, to 12,302.46. The Nasdaq Composite decreased 43.53, or 1.9 percent, to 2,280.83. Three stocks fell for every one that rose on the New York Stock Exchange.

The market opened the day higher after the government said personal spending, which accounts for more than two-thirds of the economy, rose at a 2.3 percent annual rate in the fourth quarter and jobless claims unexpectedly decreased last week.

Rebound in Jeopardy

The second day of declines for the S&P 500 halted the index's rebound from a 19-month low reached March 10. The benchmark for U.S. equities is still up 4.1 percent since then after the Federal Reserve cut interest rates and pumped more cash into the financial system to stem credit-market losses that have topped $200 billion worldwide.

Lehman shares dropped the most in a week after options traders speculated the bank faces funding shortages. The company said the speculation is unfounded.

Oracle fell $1.51, or 7.2 percent, to $19.43 and contributed the most to the S&P 500's drop. The threat of a U.S. recession brought about by falling home prices and losses in mortgage-related investments has made customers hesitant to spend on technology, the company said yesterday.

Sales that include maintenance fees from acquired companies climbed to $5.37 billion in the quarter ended Feb. 29, Oracle said. That trailed the $5.41 billion average estimate of analysts in a Bloomberg survey. Citigroup cut its share-price target to $25 from $28 after the report.

Earnings Slump

``All the macro indicators show the economy is slowing, but we haven't seen it hitting the company level too much outside of financials,'' said Doug Peta, market strategist at J&W Seligman & Co. in New York, which manages $19 billion. ``The Oracle news suggests that this could be the beginning.''

Fourth-quarter earnings at S&P 500 companies fell almost 23 percent from a year earlier, dragged down by record losses at financial companies. Excluding financials, earnings grew almost 16 percent, according to Bloomberg data.

Google retreated $14.11 to $444.08. Clicks on Google's sponsored links, which are four-line ads that mostly run next to search results, rose 3 percent to 515 million in February from a year earlier and were down 3 percent from January, researcher ComScore Inc. said yesterday. In January, Google had no growth, after a 25 percent increase in the fourth quarter.

The ComScore data ``could imply risk'' to first-quarter earnings estimates, Citigroup Inc. analyst Mark Mahaney wrote in a report today.

Bank of America, JPMorgan

Bank of America and JPMorgan led financial shares lower after their biggest retreat in almost two weeks yesterday. Lehman analyst Jason M. Goldberg slashed his earnings-per-share estimates for U.S. large and mid-sized banks this year by 7 percent, saying he expects higher-than-forecast loan-related losses.

Bank of America fell $1.20 to $38.64. JPMorgan lost $1.25 to $42.86. First-quarter earnings for financial companies are forecast to fall 45 percent from the year-earlier quarter, according to the average of estimates collected by Bloomberg as of March 20. At the end of February, the average forecast was for a 28 percent decline.

At least a dozen analysts have reduced profit estimates in the past six weeks for the biggest banks and securities firms.

Lehman Brothers fell $3.78, or 8.9 percent, to $38.71, extending its drop since March 20 to more than 20 percent. Lehman fell to a four-year low on March 17 on speculation it faced a liquidity crisis similar to the one that forced Bear Stearns Cos. to sell itself to JPMorgan.

Merrill Slump

Merrill Lynch & Co., the biggest U.S. brokerage, fell $2.52, or 5.7 percent, to $41.90. Sanford C. Bernstein analysts led by Brad Hintz said Merrill may write down $4.5 billion on collateralized debt obligations and post a first-quarter loss.

Bernstein cut Merrill's first-quarter earnings estimate to a loss of $1.60 per share, from an earlier estimate of a $1.30 profit. As a result of the drop, Bernstein estimates the New York-based bank will earn $1.18 per share in 2008, compared with a previous estimate of $4.10.

Nine of 10 industry groups in the S&P 500 fell, including energy, which had gained for four straight days and traded up for most of the session. Crude oil rose for a third straight day and exceeded $107 a barrel for the first time in a week after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal.

The U.S. economy grew at an annual pace of 0.6 percent in the fourth quarter, matching the slowest since the fourth quarter of 2002, the Commerce Department said today in its third and final report on the period.

Utilities Rise

Sempra Energy, owner of the largest U.S. natural-gas utility, led utilities to the only gain among the 10 groups, adding $1.98 to $53. Sempra said it expects 2009 per-share profit to rise to $4.35 to $4.60 as the company opens natural- gas import terminals and extends pipeline operations. The average of 11 analyst estimates compiled by Bloomberg for earnings excluding one-time items was $4.58 a share.

ConAgra Foods Inc. rose the most in eight years, climbing $1.56, or 7.1 percent, to $23.45 for the second-biggest gain in the S&P 500. The maker of Orville Redenbacher popcorn and Slim Jim meat snacks reported quarterly profit that rose more than analysts predicted, boosted its full-year profit forecast and sold its commodity-trading unit to focus on food.

Clear Channel Communications Inc. was the biggest winner in the S&P 500, adding $2.68, or 10 percent, to $26.60 as lawsuits filed by the broadcaster and its private-equity buyers bolstered speculation that the $19.5 billion deal will be salvaged.

`Lenders' Remorse'

The biggest U.S. radio broadcaster, along with Bain Capital LLC and Thomas H. Lee Partners LP, accused banks led by Citigroup Inc. of backing out of commitments to provide $22.1 billion in financing because of ``lenders' remorse.'' A Texas judge issued a temporary injunction last night telling banks they can't thwart the buyout by refusing to fund it.

McCormick & Co. added $1.73 to $37.84. The world's biggest maker of spices increased its prediction for sales growth for the full year after boosting prices to counter rising commodity prices.

EBay Inc. rose $1.27 to $30.74, the highest in 12 weeks. American Technology Research analyst Timothy Boyd said the world's biggest online auctioneer may beat first-quarter earnings estimates on faster-than-expected sales-listings growth. EBay cut charges for listing items by 25 percent to 50 percent last month and raised the fee it gets when an item sells in an effort to keep customers from defecting to Amazon Inc.

The Russell 2000 Index, a benchmark for companies with a median market value of $524 million, dropped 1.4 percent to 692.39. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 1.1 percent to 13,363.85. Based on its decline, the value of stocks decreased by $193 billion.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Last Updated: March 27, 2008 16:50 EDT