Stocks in U.S. Drop as Spanish Yields Rise; Wal-Mart Retreats on Earnings

By Rita Nazareth - Nov 15, 2011 10:19 PM GMT+0700

U.S. stocks fell for a second day as a surge in Italian, Spanish and French bond yields fueled concern that Europe’s debt crisis is worsening and Wal-Mart Stores Inc. (WMT) slumped after profit trailed estimates.

The S&P 500 dropped 0.2 percent to 1,249.4 at 10:18 a.m. New York time. The Dow Jones Industrial Average retreated 27.05 points, or 0.2 percent, to 12,051.93.

“Borrowing costs aren’t where they should be and that is hurting the market,” said Virginie Robert, Paris-based managing director at Raymond James Asset Management International, which oversees about $30 billion.

Equity futures trimmed losses before New York exchanges opened today after a Commerce Department report showed U.S. retail sales increased 0.5 percent in October, topping economists’ estimates, and the Federal Reserve Bank of New York’s general economic index unexpectedly rose to 0.6, the first positive reading since May.

Stocks fell yesterday, snapping a two-day advance in the S&P 500, as an increase in Italian borrowing costs deepened concern Europe will struggle to contain its crisis. Stocks rose last week as improving economic data and leadership changes in Greece and Italy bolstered optimism.

The yield on French 10-year bonds climbed today to a euro- era record relative to benchmark German bunds, as did Belgium’s and Spain’s. Mario Monti, Italy’s premier-in-waiting, faced political resistance on forming a Cabinet during talks in Rome yesterday. Economic growth in Europe failed to accelerate in the third quarter, the European Union’s statistics office said.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

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