Nov. 15 (Bloomberg) -- U.S. stocks fell for a second week as profit outlooks worsened for companies from Goldman Sachs Group Inc. to Best Buy Co., the Treasury shifted its rescue away from banks and General Motors Corp. faced bankruptcy speculation.

Goldman Sachs retreated to the lowest level since 2003 on concern the firm will post its first loss as a public company, while Best Buy fell 14 percent after saying earnings will shrink amid a “seismic” consumer slowdown. Financial companies in the Standard & Poor’s 500 Index slid to a 12-year low as the Treasury said it will focus on relieving consumer credit pressure. GM tumbled 31 percent amid bets that it will collapse without government aid.

“Equity markets are going nowhere for a long time,” said Jeffrey Saut, who helps oversee $190 billion as the St. Petersburg, Florida-based chief investment strategist at Raymond James Financial Inc. “There’s no doubt we’re going into a recession. How deep and long it will be is still unknowable.”

The S&P 500 slid 6.2 percent to 873.29, while the Dow Jones Industrial Average fell 446.50 points, or 5 percent, to 8,497.31. The Russell 2000 Index of small U.S. companies lost 9.7 percent to 456.52. The MSCI World Index of 23 developed markets lost 6.4 percent to 879.42.

The S&P 500 has lost 18 percent so far this month, extending October’s 17 percent plunge, as the recession deepens and credit losses from financial companies climbs to $964 billion. The U.S. stock benchmark has slumped 41 percent this year, which would be the steepest annual decline since 1931.

Focus Shifts

Banks, insurers and asset managers led declines among 10 S&P 500 industry groups with a 12 percent loss this week. The Treasury said it would use the second half of its $700 billion financial-rescue program to focus on consumer lending instead of buying devalued mortgage assets.

Citigroup Inc., Bank of America Corp. and BB&T Corp. tumbled more than 12 percent. The S&P 500 Financials Index closed at the lowest level since 1996 on Nov. 12.

Goldman Sachs, once Wall Street’s most profitable investment bank, fell 14 percent to $66.73. The firm may report a fourth- quarter loss of $2.50 a share because of stock market declines, analysts at Barclays Plc said.

American International Group Inc. slipped 1.4 percent to $2.08. AIG got a $150 billion government rescue package, almost doubling the initial bailout of less than two months ago as the insurer burns through cash at a record rate.

Insurance-Costs Rise

The Chicago Board Options Exchange Volatility Index posted the biggest weekly gain in a month, adding 18 percent to 66.31. The measure, known as the VIX, tracks the cost of using options as insurance against declines in the S&P 500.

Retail sales dropped the most on record, falling 2.8 percent in October, the Commerce Department said yesterday. That’s the fourth straight decline, signaling a deepening recession as Americans cope with the highest unemployment rate in 14 years.

Companies in the S&P 500 that are reliant on discretionary spending by consumers retreated 9.2 percent collectively.

Best Buy sank 14 percent to $22.06. The world’s largest electronics retailer said annual profit will fall more than it projected and said this is “the most difficult climate we’ve ever seen.”

“The poor earnings and lowering of guidance for 2009 continues to surprise the market,” said Marian Kessler, a Portland, Oregon-based money manager at Becker Capital Management Inc., which oversees $1.7 billion. “It’s not priced in yet.”

Circuit City Stores Inc., Best Buy’s rival, filed for bankruptcy protection, becoming the recession’s biggest retail casualty. The 59-year-old retailer, with 721 stores in the U.S., plunged 94 percent this year to 27 cents.

Macy’s Cuts Spending

Macy’s Inc., the second-biggest U.S. department-store chain, slid 31 percent to $7.52 after saying it’s buying less merchandise and cutting capital spending to brace for a disappointing spring shopping season.

Earnings dropped 17 percent on average at companies in the S&P 500 that have reported third-quarter results, according to Bloomberg data. Companies from J.C. Penney Co. to Intel Corp. cut forecasts this week. Analysts expect an 8.5 percent decline in full-year profit, based on estimates compiled by Bloomberg.

Target Corp., Home Depot Inc. and Dell Inc. are among the S&P 500 companies scheduled to report earnings next week.

GM dropped 31 percent to $3.01 as U.S. lawmakers fought over whether to allow part of the $700 billion financial-rescue package to aid U.S. automakers. The company, which warned last week that it may run out of operating cash this year, needs as much as $30 billion in assistance through 2010, analysts said.

$54.67 a Barrel

Energy producers in the S&P 500 fell for a second week, losing 3.6 percent, as the weakening economy diminished demand for commodities.

Massey Energy Co., Weatherford International Ltd. and Smith International Inc. fell more than 15 percent. ConocoPhillips, the second-largest U.S. refiner, dropped 8.1 percent to $47.39.

Oil declined 8.6 percent to $57.04 a barrel and touched $54.67 on Nov. 13, the lowest intraday price since January 2007. The Reuters/Jefferies CRB Index of 19 commodities slid 3.6 percent. The measure has fallen every week, except twice, since the beginning of September.

The S&P 500 Real Estate Index tumbled 19 percent as all 14 companies dropped.

Prologis, the world’s largest warehouse developer, plummeted 49 percent to $5.08 for the steepest weekly decline in its 14- year history as a public company. Prologis cut its dividend and said it plans to halt new developments as the credit crisis worsens. Chief Executive Officer Jeffrey Schwartz resigned.

People’s United Financial Inc. climbed 9 percent to $18.15. The largest New England-based lender replaced Unisys Corp. in the S&P 500.

The cost of living in the U.S. probably fell in October by the most in almost 60 years, while manufacturing and homebuilding sank deeper into a recession, according to economists polled by Bloomberg News before reports next week.

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

Last Updated: November 15, 2008 08:00 EST