U.S. stocks retreated after six straight gains for the Standard & Poor’s 500 Index, amid declines in consumer shares after a government report showed retail sales fell in June. Target Corp. and Home Depot Inc. retreated more than 1 percent after the government said sales at retailers dropped in June for a second month, indicating the pace of economic rebound moderated heading into the second half of 2010. Yum! Brands Inc. fell 2.8 percent after its 2010 earnings forecast fell short of analyst estimates. Intel, the largest chipmaker, rallied 4.8 percent after predicting a record yearly profit. The Standard & Poor’s 500 Index, which has rallied 7 percent over the past six sessions, slipped 0.3 percent to 1,091.64 as of 10:15 a.m. in New York. The Dow Jones Industrial Average lost 20.36 points, or 0.2 percent, to 10,342.66. “There’s a wrestling match between the macro activity, which is weakening, and excellent execution by companies, which are lean and mean and the business models are starting to work,” said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. The S&P 500 rebounded from a 10-month low on July 2, paring its drop for the year to 1.8 percent as of yesterday, amid optimism that second-quarter earnings will overshadow disappointing home sales, manufacturing and jobs data. Analysts predict earnings in the S&P 500 grew 34 percent last quarter, according to estimates compiled by Bloomberg. S&P 500 Performance The S&P 500 plunged 16 percent between April 23 and July 2, reaching its lowest valuation relative to earnings in a year, on concern a sovereign-debt crisis in Europe is spreading and economic growth in China and the U.S. is slowing. The benchmark gauge closed up 1.5 percent yesterday, a sixth day of gains and the longest winning streak since April 15. It hasn’t advanced for seven straight days since October 2006. Intel gained 4.8 percent to $22.01 for the biggest gain in the Dow average. The company, whose processors run more than 80 percent of the world’s personal computers, reported record second-quarter sales and topped analysts’ estimates with its forecast for the current period, allaying concern that a rebound in technology spending is losing steam. Third-quarter sales will be $11.6 billion, plus or minus $400 million, the Santa Clara, California-based company said. Analysts had estimated $10.9 billion on average, according to a Bloomberg survey. Intel said its gross profit margin will reach 66 percent this year, while its second-quarter earnings also topped estimates. AMD, Nvidia Advanced Micro Devices, which is due to report profit tomorrow, gained 2.1 percent to $7.68. Nvidia, the second- largest maker of graphics chips, rose 1.7 percent to $11.11. Texas Instruments, the second-biggest U.S. chipmaker, increased 0.5 percent to $25.52. U.S. stock-index futures rose as much as 0.9 percent before exchanges opened. The gains began to erode after weekly data from the Mortgage Bankers Association showed requests for purchase financing dropped to the lowest level in more than 13 years. Futures extended their declines after the retail sales report. Purchases decreased 0.5 percent, more than expected, following a 1.1 percent May drop, the Commerce Department said. Excluding auto dealers, demand fell 0.1 percent, matching the median forecast of economists surveyed by Bloomberg News. Target, Home Depot Target, the second-biggest U.S. discount retailer, fell 1.4 percent to $49.19. Home Depot, the largest U.S. home-improvement retailer, dropped 1.3 percent to $28.28. Yum! Brands Inc. declined 2.8 percent to $40.32. The owner of the KFC and Taco Bell restaurant chains boosted its fiscal- year 2010 per-share profit forecast to $2.43 after markets closed yesterday, falling short of the $2.48 expected by analysts in a Bloomberg survey. Expeditors International of Washington Inc. rose 5.2 percent to $39.10 for the biggest gain in the S&P 500. The manager of cargo ships said second-quarter profit was at least 38 cents a share, topping the 31-cent average analyst estimate. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

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