By Lynn Thomasson Nov. 6 (Bloomberg) -- U.S. stocks fell for a second day after Cisco Systems Inc. forecast the first revenue decline in five years and News Corp. cut its profit outlook, deepening concern the economic slowdown is hurting earnings. Cisco, the world's largest maker of networking equipment, lost as much as 4 percent. News Corp. sank 16 percent after the media company controlled by Rupert Murdoch cited shrinking ad sales. Retailers and automakers declined 2.5 percent as a group after unemployment claims climbed to the highest in 25 years. ``We're a long way from the end of the economic challenges,'' said Mike Morcos, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. ``Earnings next year are going to be significantly lower and estimates are going to continue to come down.'' The Standard & Poor's 500 Index dropped 27.68 points, or 2.9 percent, to 925.09 at 11:32 a.m. in New York. The Dow Jones Industrial Average retreated 242.85, or 2.7 percent, to 8,896.42. The Nasdaq Composite Index lost 41.46, or 2.5 percent, to 1,640.18. Almost six stocks retreated for each that rose on the New York Stock Exchange. Stocks extended yesterday's 5.3 percent decline in the S&P 500 as Tyco Electronics Ltd., the biggest maker of electronic connectors, also said earnings fell and Citigroup Inc. stripped Amazon.com Inc. of its buy rating on concern about consumer spending. Computer stocks in the S&P 500 are down 41 percent in 2008, while financials lost 49 percent and retailers tumbled 31 percent, their biggest annual declines on record. Yearly Drop The S&P 500, which rebounded as much as 18 percent from a year low on Oct. 27, is down 37 percent this year, the steepest annual retreat since 1937. Europe's Dow Jones Stoxx 600 declined 5.3 percent today, while MSCI's Asia Pacific index retreated 5.9 percent. Stocks slid even after the Bank of England unexpectedly cut its benchmark interest rate by 1.5 percentage points to 3 percent, trying to contain the damage caused by a recession. Switzerland's central bank and the European Central Bank reduced their main lending rates by 50 basis points. About 481,000 workers filed initial jobless claims last week, the Labor Department said today in Washington, exceeding the 477,000 projected by economists surveyed by Bloomberg News. The number of people staying on benefit rolls was the most since February 1983. A report tomorrow will probably show U.S. employers eliminated jobs in October for a 10th consecutive month, based on economists' estimates. Earnings at companies in the S&P 500 that have reported third-quarter results fell 7.2 percent on average, Bloomberg data show. Analysts expect full-year profits to drop 7.7 percent, according to estimates compiled by Bloomberg. Cisco Falls Cisco declined 56 cents to $16.84 after earlier dipping as low as $16.67. Chief Executive Officer John Chambers said sales will drop as much as 10 percent in the second quarter because of the financial crisis. In August, Chambers predicted an advance of 8.5 percent from a year earlier. Technology companies in the S&P 500 lost 3.6 percent collectively. Apple Inc., Intel Corp. and Hewlett-Packard Co. fell more than 4 percent. News Corp.'s Class A shares tumbled $1.61 to $8.18. Fiscal 2009 profit will drop in the ``low to mid teens'' in percentage terms, the company said after previously forecasting a gain of 4 percent to 6 percent. Tyco Electronics Ltd., the world's biggest maker of electronic connectors, tumbled 16 percent to $15.99. Fiscal fourth-quarter profit fell 55 percent on restructuring costs and the company forecast a ``significant'' drop in sales and earnings this period. Amazon, Wells Fargo Amazon.com slid 5.5 percent to $49.14. The largest Internet retailer was cut to ``hold'' from ``buy'' at Citigroup Inc., which noted the shares' surge of as much as 36 percent since third-quarter results and ``heightened macro concerns'' including slower consumer spending. Energy companies fell the most among 10 S&P 500 industries, losing 5.3 percent as a group, as oil declined for the third time this week. Crude oil for December delivery retreated as much as 7 percent to $60.69. Southwestern Energy Co. had the steepest loss in the group, losing 14 percent to $31.88. Exxon Mobil Corp., the world's largest oil company, slipped 2.3 percent to $71.97. Chevron Corp. slid 2.9 percent to $72.71. Blackstone Tumbles Blackstone Group LP tumbled 11 percent to $7.65. The world's largest private-equity firm posted the biggest quarterly loss in 18 months as a public company as the financial crisis eroded the value of the businesses and real estate it has acquired. Blackstone had been expected to break even, based on the average estimate of seven analysts in a Bloomberg survey. Wells Fargo & Co. declined 6.8 percent to $29.53 after the biggest bank on the U.S. West Coast said it plans to sell stock to fund the purchase of Wachovia Corp. The bank also said losses from the acquisition will be less than previously expected. The bank, which disclosed the share offering yesterday in a statement, had said it would raise as much as $20 billion to fund the deal. That was before the Treasury said it was buying $25 billion of Wells Fargo's preferred shares. Analysts are lowering fourth quarter and 2009 profit forecasts for U.S. companies as third-period results miss projections at the highest rate in almost 11 years. Earnings Concern Companies in the S&P 500 may see fourth-quarter earnings advance 15 percent, down from 42 percent projected at the end of August, according to a Bloomberg survey of analysts. Profits in 2009 may grow 13 percent, analysts say, compared with the 24 percent predicted two months ago. Yahoo! Inc. jumped 4.2 percent to $14.50. Chief Executive Officer Jerry Yang, coping with the cancellation of an advertising agreement with Google Inc., said at a conference in San Francisco that he's open-minded about forging other deals. Wal-Mart Stores Inc., the world's largest retailer, increased 1.8 percent to $55.11. October sales climbed more than the company projected after consumers, battered by job losses and shrinking credit, bought discounted groceries and Halloween costumes. The London interbank offered rate, or Libor, for three-month loans in dollars dropped 12 basis points to 2.39 percent today, the lowest level since November 2004, according to the British Bankers' Association. To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

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