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U.S. Stocks Drop While Italy, Spain Bonds Advance on Euro

U.S. stocks fell as Macy’s Inc. paced a drop in retailers after reducing its earnings forecast and economists predicted the Federal Reserve will taper asset purchases next month. Italian and Spanish bonds rose with European shares as the euro area exited its longest recession.

The Standard & Poor’s 500 slipped 0.5 percent to 1,685.39 at 4 p.m. in New York, with trading volumes about 22 percent below the 100-day average. Italy’s 10-year yield decreased five basis points to 4.18 percent and the Stoxx Europe 600 Index added 0.3 percent for a fifth straight gain. The pound rebounded from a three-day slump as U.K. jobless claims dropped more in July than analysts forecast. Treasury yields were little changed near the highest level this year. Egyptian shares and bonds slid as political violence escalated.