U.S. and European stocks fell, dragging the Standard & Poor’s 500 Index to the lowest level since January, as investors speculated Spanish banks may have their credit ratings lowered and an American gauge manufacturing trailed projections. The S&P 500 slipped 0.2 percent to 1,322.73 at 10:20 a.m. New York time, dropping a fifth straight day. The Stoxx Europe 600 Index (SXXP) lost 0.9 percent to the lowest level since December. The MSCI All-Country World Index lost as much as 0.7 percent to extend its retreat from this year’s peak to 10 percent. The yield on two-year Spanish debt jumped 10 basis points to 4.19 percent as borrowing costs increased at a debt auction. The Dollar Index (DXY) added 0.2 percent, advancing for a record 14th day. Oil rebounded 0.5 percent from a six-month low. Moody’s Investors Service is set to downgrade the credit ratings of Spanish banks later today, said two people with knowledge of the situation, who asked not to be identified because the decision hasn’t been announced. The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 5.8 in May. Economists said the gauge would rise to 10. “It’s a double whammy,� James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. His firm oversees about $333 billion of assets. “Not only do we have continued scary European news, we’ve got weak economic data in the U.S. today. We’re going to bounce around for a while.� More than $3 trillion has been erased from the value of equities worldwide this month as concern Greece will exit the euro curbed demand for riskier assets. The country faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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