U.S. stocks retreated, paring a global rally, as financial shares fell for the first time in three days on growing skepticism that the Federal Reserve’s plan to buy bonds will revive the economy. JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc. lost at least 3 percent. Prudential Financial Inc., the second-biggest U.S. life insurer, tumbled 16 percent after its senior debt rating was downgraded by Moody’s Investors Service because of investment losses. Oracle Corp. led an advance in technology shares after its earnings topped estimates and the company said it will start paying a dividend. The Standard & Poor’s 500 Index lost 0.6 percent to 789.56 at 11:15 a.m. in New York after climbing to a one-month high yesterday following the Fed’s announcement. The Dow Jones Industrial Average decreased 55.04 points, or less than 0.7 percent, to 7,431.54. The Nasdaq Composite Index slipped 0.4 percent to 1,485.82. “We’re in the middle of the wait-and-see process for all these policy initiatives,” said Wasif Latif, who helps oversee $90 billion at USAA Investment Management Co. in San Antonio. “The initial reaction was very strong but people may be rethinking this as they go through the details.” The S&P 500 has rebounded 17 percent from a 12-year low on March 9. Financial shares have rallied in seven of the previous eight days, advancing 54 percent from March 6 through yesterday. The gains came as Citigroup Inc., Bank of America Corp. and JPMorgan said they were profitable in January and February, spurring speculation the worst of the financial crisis is over. The gains pushed the S&P 500 Financials Index’s 14-day relative strength index, a measure of whether stocks have risen too far too fast, to its highest since October 2007 yesterday. ‘Holding Their Breath’ “Everyone’s holding their breath and asking whether this rally has legs to it or not,” said Keith Wirtz, who helps oversee $20 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “A lot of money is still on the sidelines.” JPMorgan, the biggest U.S. bank by market value, fell 4.2 percent to $25.96. Morgan Stanley declined 11 percent to $21.52 and Goldman Sachs slid 3 percent to $102.08. Nike Inc. dropped 45 cents to $45.47 after saying third- quarter sales dropped 2 percent to $4.4 billion, while net income plunged 47 percent to $243.8 million. Airlines fell after the International Air Transport Association said losses this year may exceed the $2.5 billion projected in December as the global recession saps demand. UAL Corp. fell 7.8 percent to $5.55. AMR Corp. dropped 6.7 percent to $3.20. Obama Bear Market The Dow industrial’s 20 percent slump between Barack Obama’s inauguration on Jan. 20 and March 5 gave him the fastest bear market under a newly elected president in at least 90 years, data compiled by Bloomberg show. The speed of the recent recovery is a signal to some fund managers that the advance may fade as the longest U.S. earnings slump shows no sign of ending. Billionaire investor Warren Buffett may turn to Sysco Corp., VF Corp. and Danaher Corp. after the chairman of Berkshire Hathaway Inc. said he’s now most likely to pursue U.S. deals following the S&P 500’s drop to the lowest level since 1996 this month. Those companies are among those that meet the criteria the investor listed in his annual report. Earnings dropped 57 percent on average for the 480 companies in the S&P 500 that have reported results since Jan. 12, according to Bloomberg data. Analysts expect profits in the measure to fall 11 percent this year before rebounding 24 percent in 2010, estimates compiled by Bloomberg show. The MSCI World Index climbed 2.3 percent after rallying as much as 3.4 percent earlier.

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