Stocks Fall, As Oil And Banks Sell-Off

U.S. stocks fell, sending the Standard & Poor’s 500 Index down from an eight-month high, as energy producers declined on lower oil prices and banks dropped following an increase in bad loans at Wells Fargo & Co.

Exxon Mobil Corp. and ConocoPhillips retreated as crude declined for the first time in six days as a U.S. government report showed a smaller-than-forecast decline in inventories. Wells Fargo, this year’s largest U.S. home lender, tumbled 4 percent. The decline in equities was limited as Starbucks Corp. and Apple Inc. rallied on better-than-expected earnings.

The S&P 500 has rallied 8.4 percent since July 10 as companies from Goldman Sachs Group Inc. to Intel Corp. reported profit that beat analysts’ estimates. The Dow gained for a seventh day yesterday, its longest rally since 2007, as Caterpillar Inc.’s earnings tripled estimates and Federal Reserve Chairman Ben S. Bernanke said there are signs the economy is stabilizing.

Wells Fargo retreated 4 percent to $24.33. The bank said bad loans jumped in the second quarter as the recession made it harder for borrowers to keep up with payments. Assets no longer collecting interest climbed 45 percent to $18.3 billion as of June 30 from the first quarter.

Bank of New York Mellon Corp., the world’s biggest custody bank, sank 5.7 percent to $27.44 after saying investment losses rose 68 percent to $256 million from $152 million a year earlier, as residential mortgage-backed securities declined in value. The provision for credit losses rose to $61 million compared with $13 million a year earlier.

KB Home and Lennar Corp. led gains in all 13 shares in an index of homebuilders after the Federal Housing Finance Agency said home prices unexpectedly increased 0.9 percent in May from the previous month. Economists in a survey expected a 0.2 percent drop.

Apple climbed 5.6 percent to $157.14 after saying profit rose to $1.23 billion, or $1.35 a share, as price cuts attracted more first-time buyers. Sales gained 12 percent to $8.34 billion in the quarter ended June 27. Analysts on average predicted profit of $1.17 a share and sales of $8.21 billion.

Starbucks advanced 17 percent to $17.29. The world’s biggest cafe owner forecast profit excluding some items of at least 74 cents to 75 cents a share in fiscal 2009, topping the average analyst estimate of 71 cents.