U.S. Stocks Fall on European Debt Crisis; Google Slumps on Antitrust Probe

U.S. stocks declined, preventing the third straight monthly advance for the Standard & Poor’s 500 Index, amid concern that Europe’s government debt crisis will worsen and as Google Inc. faced an antitrust probe.

Google fell 4.5 percent, the most since July, after European Union antitrust regulators began an investigation. EBay Inc. dropped 3.6 percent after the stock’s rating was cut at Piper Jaffray & Co. Bank of America Corp. slumped 3.2 percent, the most in the Dow Jones Industrial Average, as the cost to insure its debt against default climbed to a 16-month high.

The S&P 500 fell 0.6 percent to 1,180.55 at 4 p.m. in New York, below its end-of-October level of 1,183.26. The Dow lost 46.47 points, or 0.4 percent, to 11,006.02. Stocks briefly erased declines as President Barack Obama suggested he’s willing to compromise with Republicans on extending tax cuts.

“The things that we’ve put to bed are waking up again,” said Philip Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which manages $341.3 billion. “Ireland is a problem. The question is how far behind are Portugal and Spain? The market is concerned that this is going to become a bigger deal.”

Since reaching a two-year high on Nov. 5, the S&P 500 has lost 3.7 percent. For the second time in two sessions, the stock index has rebounded after falling below its average price from the past 50 days, a level watched by analysts who make forecasts based on chart patterns.

Europe Concern

Government securities and the euro are being dragged down by concern Portugal and Spain may suffer the fate of Ireland, which had to ask for an 85 billion-euro ($111 billion) rescue package to help bail out its banks. Italian and Spanish bond yields rose today and the extra yield investors demand to hold 10-year Italian debt instead of benchmark German bunds widened to more than 200 basis points for the first time since the euro’s debut in 1999.

U.S. stocks extended declines in the final 15 minutes of trading after S&P said it may cut Portugal’s credit ratings on concern that the government has made little progress on boosting economic growth to offset the fiscal drag from scheduled 2011 budgetary cuts.

Mohamed El-Erian, the chief executive officer at Pacific Investment Management Co., said Europe’s debt contagion will likely spread to nations such as Spain and Portugal. The 16- nation euro will probably be shared as a currency by fewer countries in five years, he said in an interview on CNBC today.

Technology Slumps

Technology companies, the biggest S&P 500 industry among 10, slumped 1.4 percent collectively.

Google lost 4.5 percent to $555.71. The company is being probed by EU antitrust regulators for allegedly discriminating against competing services in its search results and for stopping some websites accepting rival ads.

EBay dropped 3.6 percent to $29.14. The owner of the second-most visited e-commerce site was cut to “neutral” from “overweight” at Piper Jaffray, which said the company will lose market share in the next two years.

Bank of America retreated 3.2 percent to $10.95, the lowest price since May 2009. WikiLeaks founder Julian Assange, who told Forbes magazine that he’ll release documents from a U.S. bank next year, said in 2009 that his group had a hard drive from a Bank of America executive. In an e-mailed statement, Bank of America said it has no evidence WikiLeaks has the device.

The benchmark index for U.S. stock options rose to a two- month high. The VIX, as the Chicago Board Options Exchange Volatility Index, rallied 9.3 percent to 23.54. It closed above its average price from the past 200 days for the first time since Oct. 4.

70 Minutes Earlier

The CBOE said today that VIX futures will start trading 70 minutes earlier, at 8:20 a.m. New York time. Currently, they start changing hands when U.S. stock exchanges open.

The S&P 500 pared a decline of as much as 1.2 percent as Obama said he asked Treasury Secretary Timothy Geithner and budget office director Jack Lew to lead negotiations with congressional Republicans on extending Bush-era tax cuts.

“If Geithner has been appointed to deal with Congress, it means that the president sees the tax issue as a high priority,” said Keith Wirtz, who oversees $18 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “That’s good for the market. The tax issue has been among the biggest uncertainties thus far. If that is resolved, stocks may have a chance to move forward.”

The S&P 500 bounced off its average price of the last 50 days after yesterday dipping below it for the first time since September, Bloomberg data show. Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research, says the index may have found support at that level.

‘Encouraging’

“It’s encouraging thus far that we haven’t violated it,” Cincinnati-based Detrick, who studies charts to make forecasts, said in an interview. “That could be a very positive thing moving into the new year.”

Some retail companies were among the best performers in the S&P 500. Weekly retail sales rose by 0.5 percent for the week ending Nov. 27, according to the ICSC-Goldman Sachs Weekly Chain Store Sales Index. Retail sales rose by 3.5 percent on a year- over-year basis. Gap Inc., the clothing retailer, gained 3.1 percent to $21.36. Lowe’s Cos., the second-largest U.S. home- improvement retailer, rose 1.5 percent to $22.70.

Research In Motion Ltd. climbed 4.8 percent to $61.83, the highest price since June 17. The BlackBerry maker was raised to “buy” from “hold” at Jefferies Group Inc.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Tara Lachapelle in New York at tlachapelle@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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