Stocks slid, dragging the Standard & Poor’s 500 Index to its longest slump since 2008 and sending European shares to an 11-month low, while Treasuries rose amid concern the economic recovery is in jeopardy and the euro region’s debt crisis is spreading. Gold rallied. The S&P 500 fell for a seventh straight day, losing 1.2 percent to 1,271.24 at 12:38 p.m. in New York, and the Stoxx Europe 600 Index declined 1.9 percent. Yields on 10-year and 30- year Treasuries dropped to the lowest levels since November. The Swiss franc advanced against all 16 of its most-traded peers. Ten-year Italian and Spanish bond yields touched euro-era records and gold set an all-time high of $1,645.80 an ounce. Investors sought the safety of Treasuries and the Swiss currency even as the U.S. Senate passed a plan to raise the debt limit before a possible default. Attention has shifted to weakening economic data, including today’s 0.2 percent decrease in consumer spending, the slowest growth in personal incomes since November and a report yesterday that showed American manufacturing sank to a two-year low. ‘Stubbornly Slow’ “We have a stubbornly slow economy,” Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm manages about $6.5 billion. “The economy is stuck in a very slow growth mode, which means that it’s more susceptible to any external shocks,” he said. “There’s still concern about Europe. It would be good to get the U.S. debt-ceiling situation off the table.” Harvard University economics professor Martin Feldstein said he sees a 50 percent chance of a renewed U.S. recession. “Nothing has given us much growth,” Feldstein said today in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene. Feldstein is a member of the committee that dates recessions for the National Bureau of Economic Research. Today’s retreat brought the S&P 500 to within 2 percentage points of its low for the year on March 16. All 10 industry groups fell, led by industrial companies. General Electric Co. lost 2.6 percent to lead declines in 26 of 30 stocks in the Dow Jones Industrial Average. Archer Daniels Midland Co., the world’s largest grain processor, tumbled 3.6 percent as earnings trailed projections after corn and tax expenses rose. MetroPCS Communications Inc., the pay-as-you-go mobile-phone carrier, lost 30 percent as sales fell short of analysts’ forecasts. The 10-year Treasury yield declined seven basis points to 2.68 percent, the lowest since November. The difference between two- and 10-year yields shrank to 2.35 percentage points, the narrowest since December, as demand reduced the extra yield investors require to hold longer-maturity debt. Jobs Outlook Investors also looked ahead to the government’s employment report at the end of the week. The nation is forecast to have added 85,000 jobs in July, according to the median estimate of economists surveyed by Bloomberg, and the unemployment rate is projected to hold steady at 9.2 percent. “Maybe we’ll get a positive number on Friday, but I wouldn’t be shocked if we got a negative one, and I don’t see any strong job growth at all for the next few months until we get a little bit of momentum in terms of final demand,” David Kelly, the chief market strategist at JPMorgan Funds, said in a Bloomberg Television interview. “The first half of this year the U.S. economy grew by eight-tenths of 1 percent. Now you need to have sustained growth of one-and-a-half percent even to produce positive payrolls.” European Shares Fourteen stocks fell for each that gained in the Stoxx Europe 600 Index. Pandora A/S plunged 65 percent as the Danish maker of charm bracelets cut its forecast and Chief Executive Officer Mikkel Vendelin Olesen quit. Metro AG, Germany’s largest retailer, slid 7.5 percent as earnings missed estimates. The Swiss franc strengthened more than 2 percent to a record 1.09465 per euro and appreciated 1.4 versus the dollar. The Dollar Index, which tracks the U.S. currency against those of six trading partners, was rose 0.2 percent. The yield on the Italian 10-year bond jumped as much as 25 basis points to 6.25 percent, driving the extra yield investors demand to hold the securities instead of benchmark German bunds to a euro-era record 3.84 percentage points. The Spanish 10-year yield surged as much as 26 basis points to 6.46 percent, also the highest since the euro was introduced in 1999. 'Ugly Contest' “In this U.S.-versus-Europe ugly contest, it’s hard to decide where to start from,” analysts at BNP Paribas wrote in a research note. “The economic slowdown is blatantly obvious in the large drop in U.S. manufacturing. And the issue of a U.S. downgrade remains open. Things are looking less comfy in Europe too, with Italy spreads again under severe pressure.” Credit-default swaps tied to Spain’s debt surged 14 basis points to 404 and Italy’s jumped 23 to 356, according to CMA. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments jumped 14 basis points to 291, approaching the record closing price of 306.5 set July 18. The Standard & Poor’s GSCI index of 24 commodities swung between gains and losses following a four-day retreat. Silver, cotton and gold climbed more than 1.2 percent to lead gains among 13 of 24 materials tracked by the index, while sugar and natural gas led declines. The Australian dollar slid more than 1.2 percent versus the greenback and the yen after the central bank kept its benchmark interest rate unchanged, citing an “acute sense of uncertainty in global financial markets.” Reserve Bank Governor Glenn Stevens held the overnight cash rate target at 4.75 percent in Sydney for a record eighth-straight meeting. The MSCI Emerging Markets Index lost 1.6 percent, the steepest drop since July 12. South Korea’s Kospi Index (KOSPI) fell 2.4 percent, the most since May 23. The Shanghai Composite Index declined 0.9 percent after an official Xinhua News Agency website said China may boost borrowing costs next week. The Bombay Stock Exchange Sensitive Index dropped 1.1 percent after Reserve Bank of India Governor Duvvuri Subbarao said yesterday that interest rates would have to rise further. To contact the reporters on this story: Stuart Wallace in London at swallace6@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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