U.S. stocks fell for the first time in five days as Mike Mayo, analyst at Calyon Securities, advised selling bank shares and International Business Machines Corp.’s purchase of Sun Microsystems Inc. collapsed. U.S. Bancorp and SunTrust Banks Inc. slid at least 5 percent as Mayo said government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression. Sun Microsystems sank 22 percent as people familiar with the matter said talks with IBM fell apart. U.S. Steel Corp. and AK Steel Holding Corp. lost at least 4.8 percent as metals fell on concern over the slumping economy. “Concern about the condition of the financial system will be here for a while, at least for the rest of the year,” said Stanley Nabi, vice chairman of Silvercrest Asset Management Group, which oversees $8 billion in New York. “It will take a while to put the pieces together.” The Standard & Poor’s 500 Index retreated 1.5 percent to 829.56 as of 10:44 a.m. in New York. The Dow Jones Industrial Average slipped 99.8, or 1.2 percent, to 7,917.79. The MSCI World Index of 23 developed nations lost 1.2 percent. U.S. stocks capped a fourth straight week of gains on April 3, the longest stretch since the bear market began in 2007, as the economy showed signs of improvement and Group of 20 world leaders agreed on measures to halt the recession. The S&P 500 Index has rebounded 23 percent from a 12-year low on March 9. Europe’s Dow Jones Stoxx 600 Index declined 1.1 percent, erasing a 1.9 percent advance, after Morgan Stanley cut the region’s stocks to “underweight” from “neutral.” The MSCI Asia Pacific Index climbed 0.5 percent. Mayo’s Call to Sell U.S. Bancorp lost 83 cents to $15.14 and SunTrust slid $1.05 to $12.77. Mayo, the former Deutsche Bank AG analyst who gained a reputation for independence, gave “sell” ratings to the two companies as well as BB&T Corp., Fifth Third Bancorp and KeyCorp, while “underperform” ratings were assigned to Bank of America Corp., Citigroup Inc., Comerica Inc., JPMorgan Chase & Co., PNC Financial Services Group Inc. and Wells Fargo & Co. He cited concern over rising loan losses. “While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class,” Mayo wrote in a report today. “New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average.” A gauge of financial companies in the S&P 500 fell 3.4 percent for the biggest decline among 10 industry groups. The group of 80 banks, insurers and investment firms is still 55 percent above its March 6 low. Jobless Concern American Express Co. fell 3.9 percent to $14.74 for the top decline in the Dow average after Barclays Plc cut its 2009 earnings estimates for the largest credit-card company by 58 percent to 65 cents a share, citing higher-than-expected unemployment rates. The U.S. jobless rate jumped in March to the highest level since 1983 and service industries shrank at a faster pace, indicating the economy remains trapped in what’s likely to be the longest recession since the 1930s. Sun slid $1.88 to $6.61. Sun’s board, headed by co-founder Scott McNealy, informed IBM on April 4 it was breaking off exclusive negotiations, according to the person. Offer Rejected Sun, the developer of the Java programming language, rejected an offer of about $9.40 a share as too low, said the person, who declined to be identified because the talks are private. IBM, the world’s largest computer-services provider, slipped 1.1 percent to $101.05. Edward Barbini, a representative for IBM, declined to comment and Sun spokesman Shawn Dainas didn’t return an e-mail seeking comment. Cisco Systems Inc. fell 4.4 percent to $17.37 as the largest maker of networking equipment was cut to “neutral” from “conviction buy” at Goldman Sachs Group Inc., saying “we view our growth expectation as largely priced in.” Cisco is ready to pick up the pace of mergers and acquisitions over the next year after the valuations of technology companies slumped, said Ned Hooper, senior vice president of corporate business development. Campbell Soup Co. slipped 3.4 percent to $26.50 after the biggest soupmaker had its recommendation cut to “neutral” from “overweight” at JPMorgan. Raw-material companies in the S&P 500 retreated 3 percent collectively for the second-biggest decline in the index after industrial metal prices fell and Deutsche Bank AG cut its earnings estimates for steelmakers, citing lower prices and consumption. Steel Stocks Slide U.S. Steel, the largest U.S.-based steelmaker, and AK Steel Holding Corp., the third-biggest, fell more than 4 percent. Copper fell from a five-month high as declining equity markets spurred concern that a recent rally may have been overdone, given the slumping global economy. The four-week rebound in stocks was spurred by Citigroup, Bank of America and JPMorgan Chase & Co., which said they made money in January and February, and Treasury Secretary Timothy Geithner’s plans to finance as much as $1 trillion in purchases of distressed assets from financial firms. Earnings at companies such as Alcoa Inc., which will kick off the first-quarter reporting season tomorrow, and Dow Chemical Co. may show the first signs of recovery in the second quarter after profits at S&P 500 Index members fell 37 percent in the first three months of 2009, according to estimates compiled by Bloomberg. Stocks in Recessions In 11 recessions since 1938, U.S. stocks have rebounded an average of five months before a recovery in earnings, according to data compiled by Bloomberg. The economy has contracted for 16 months, equaling the two longest slumps -- between 1973-1975 and 1981-1982 -- since the Great Depression. American companies will end more than two years of declining income by the fourth quarter, according to analyst forecasts compiled by Bloomberg. Banks will be responsible for all of the 76 percent rebound in the final three months of the year, because without financial companies, the gain turns into a 4.5 percent decline, the data show. The rally that drove the S&P 500 to an almost eight-week high is “losing steam,” according to an “Elliott Wave” analysis by DMG & Partners Securities. The benchmark index for U.S. stocks will struggle to rise beyond the “resistance level” of 866 to 877, James Lim, a Singapore-based analyst at DMG, wrote in a report. The S&P 500 closed at 842.50 on April 3. The wave principle is a theory developed by accountant Ralph Nelson Elliott during the Great Depression. He concluded that market swings, or waves, follow a predictable, five-stage structure of three steps forward, two steps back.

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