By Elizabeth Stanton Nov. 3 (Bloomberg) -- U.S. stocks swung between gains and losses as a worse-than-forecast slump in manufacturing offset lower borrowing costs and expectations that telephone companies will weather the economic slowdown. Boeing Co. fell as much as 3.1 percent after Goldman Sachs Group Inc. added the planemaker to its ``conviction sell'' list and the Institute for Supply Management's manufacturing index contracted in October at the fastest pace since 1982. AT&T Inc. and Verizon Communications Inc. jumped more than 3.5 percent as Wachovia Corp. said their valuations are ``compelling'' and the stocks are a ``safe haven'' during a slowing economy. ``Investors are all looking for safe spaces,'' Robert Lutts, president of Cabot Money Management in Boston, which oversees $400 million, said of telephone companies. ``There's so little confidence in so many other areas. It's been harder than usual for investors to find those safe areas.'' The Standard & Poor's 500 Index declined 2.01, or 0.2 percent, to 966.74 at 10:44 a.m. in New York after climbing as much as 0.7 percent. The Dow Jones Industrial Average added 0.4 point to 9,325.41. The Nasdaq Composite Index increased 7.53, or 0.4 percent, 1,728.48. Almost 12 stocks rose for every 10 that fell on the New York Stock Exchange. The S&P 500 sank 17 percent last month and closed at a five-year low on Oct. 27. The October sell-off erased more than $9.5 trillion from the value of stocks worldwide, almost one- third of the total value wiped out this year, as credit-related losses and writedowns by financial firms approached $700 billion. Earnings Concern S&P 500 companies may earn a combined $61 a share this year and $69 next year, more than 20 percent below the ``bottom-up'' consensus projection from stock analysts, according to Deutsche Bank AG's strategist Binky Chadha. Boeing, the world's second-largest commercial-aircraft maker, slipped $1.12 to $51.30 and lost as much as $1.60. ``There is no change to the cyclical and weakening economic fundamentals behind our cautious view,'' Goldman analyst Richard Safran wrote in a research note dated today. Halliburton Co. fell 7.7 percent to $18.27. The world's second-largest oilfield-services provider was cut to ``neutral'' from ``buy'' at Goldman, which cited ``product risks and valuation'' in a note to clients. Morgan Stanley, which converted from an investment bank to a bank holding company last month to expand its financing options, rose 94 cents to $18.41. American Express, the nation's biggest credit-card company by purchases, gained 79 cents to $28.29. Borrowing Costs The London interbank offered rate, or Libor, that banks charge for three-month loans in dollars dropped 17 basis points to 2.86 percent, the lowest level since the collapse of Lehman Brothers Holdings Inc. on Sept. 15. It was the rate's 16th consecutive drop, according to the British Bankers' Association. General Motors Corp., the biggest U.S. automaker, added 4 percent to $6.02. Crude oil fell, giving up earlier gains, as reduced imports by Asian refiners reinforced concerns that a demand slowdown is spreading to emerging markets. Separately, merger talks with Chrysler LLC may intensify this week as the companies wait to see whether the U.S. will provide financial aid to help complete the deal, people familiar with the matter said. U.S. stocks staged their steepest weekly surge in 34 years last week after the Federal Reserve's interest-rate cut and signs the credit crisis is ebbing boosted equities trading at the lowest valuations in two decades. Wall St. & Pennsylvania Ave. Election history indicates that U.S. stocks may have a better chance in the first year of an Barack Obama presidency than a John McCain administration. Since 1900, the Dow average rose 9.8 percent in the 12 months after the Democratic Party captured the White House, based on the median change following the election of seven Democrats from Woodrow Wilson to Bill Clinton. Only twice did the index drop, after Wilson's victory in 1912 and Jimmy Carter's in 1976. Polls show Democrat Obama ahead of Republican McCain as the economy looms as the main concern among voters. Obama, 47, widened his lead to 8 percentage points over McCain, 72, in an average of polls released in the last week, according to RealClearPolitics.com. To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

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