By Elizabeth Stanton Nov. 14 (Bloomberg) -- U.S. stocks fell, extending a second straight weekly loss, as a record drop in retail sales and weaker demand for mobile phones heightened concern the recession will deepen. Sears Holdings Corp. and Office Depot Inc. slid more than 3 percent after the Commerce Department said purchases at retailers declined 2.8 percent last month. Qualcomm Inc., the biggest maker of mobile-phone chips, and Motorola Inc. slid more than 3.5 percent after Nokia Oyj said the recession has damaged consumer spending. The Standard & Poor's 500 Index pared yesterday's 6.9 percent rally and extended its weekly loss to about 3 percent. Benchmark indexes pared declines as a gauge of consumer confidence topped economists' estimates. ``The retailers are just confirming what everybody already knows; the economy is in bad shape, people are not spending,'' said Malcolm Polley, president of Stewart Capital Advisors in Indiana, Pennsylvania, which manages $1 billion. ``It's just very painful while it goes on.'' The S&P 500 lost 5.37 points, or 0.6 percent, to 905.92 at 10:01 a.m. in New York. The Dow Jones Industrial Average decreased 20.31, or 0.2 percent, to 8,814.94. The Nasdaq Composite Index slipped 1.5 percent to 1,573. Three stocks fell for each that rose on the New York Stock Exchange. 38 Percent Slump The S&P 500 has slumped 39 percent in 2008 as credit- related losses and writedowns at banks, brokerages and insurers worldwide topped $950 billion in the worst financial crisis since the Great Depression. The S&P 500 jumped the most in two weeks yesterday, including a 6 percent rally in the final hour of trading, as investors snapped up the cheapest energy shares on record and real-estate companies gained after CB Richard Ellis Inc. raised cash in a share sale. ``You cannot read anything significant into that, that we have found a bottom and are waiting for a recovery,'' said London-based Justin Urquhart Stewart, director of 7 Investment Management. ``It just shows the level of nervousness and that is going to continue for some time. The background noise is going to be very poor indeed,'' he told Bloomberg Television. The 2.8 percent decrease in retail sales was the fourth consecutive drop and the biggest since records began in 1992, the Commerce Department said. Purchases excluding automobiles also posted their worst performance. ``It reminds everyone how difficult the current environment is,'' Mark Freeman, a money manager at Westwood Management Corp. in Dallas, which oversees $7 billion, said of the data and lowered forecasts from some chain stores. ``How many retailers do you need to tell you things came to a halt in October and early November?' Earnings at companies in the S&P 500 that have reported third-quarter results dropped 17 percent on average, according to Bloomberg data. Companies from Best Buy Co. to Intel Corp. have cut forecasts this week. Analysts expect an 8.5 percent decline in full-year profits, estimates compiled by Bloomberg show. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Source