By Elizabeth Stanton Feb. 25 (Bloomberg) -- U.S. stocks fell, and the Standard & Poor’s 500 Index erased yesterday’s rally, as Moody’s Investors Service said it may downgrade Greek debt and reports on American jobless claims and manufacturing orders trailed forecasts. Citigroup Inc., General Electric Co. and Apple Inc. dropped at least 1.5 percent, while Alcoa Inc. and Exxon Mobil Corp. slumped more than 1.2 percent as commodity prices retreated. Palm Inc. plunged 18 percent after the mobile-phone maker cut its sales forecast. Coca-Cola Co., the world’s largest soda maker, lost 3.9 percent after agreeing to buy Coca-Cola Enterprises Inc.’s North American bottling division. The S&P 500 declined 1.5 percent to 1,089.18 at 9:35 a.m. in New York. The Dow Jones Industrial Average fell 158.25 points, or 1.5 percent, to 10,215.91. Crude oil futures lost 2.6 percent to $77.95 a barrel in New York. “The economy is going into a little bit of a fits-and- starts period,” said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. “We don’t see any job creation coming along. That’s by far our biggest concern.” The S&P 500 rallied as much as 70 percent from a 12-year low in March as the U.S. economy recovered from its biggest contraction since the 1930s. Gross domestic product expanded at the fastest rate in five years during the fourth quarter. The equity rally stalled a month ago and the S&P 500 lost as much as 8.1 percent amid concern that the labor market isn’t recovering fast enough and that European budget deficits will slow growth. Low Rates U.S. stocks rose yesterday, sending the S&P 500 to its biggest gain in more than a week, after Federal Reserve Chairman Ben S. Bernanke said the economy still requires low interest rates to spur demand. Greece’s sovereign debt rating may be cut within months unless the country meets the objectives of its fiscal deficit reduction plan, Moody’s said today. If Moody’s cuts its credit rating to the same level as the other major ratings companies, Greek government bonds would no longer be eligible as collateral at the European Central Bank, making it more difficult for the nation to borrow. S&P said yesterday it may lower Greece’s credit rating by the end of March. Bernanke delivered the Fed’s semiannual testimony on the economy and monetary policy to a House of Representatives panel yesterday and is appearing before the Senate Banking Committee again today. The Fed is wrestling with unwinding economic stimulus programs without worsening an unemployment rate that the central bank forecasts at 9.5 percent to 9.7 percent in the fourth quarter. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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