Aug. 4 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index down for the eighth time in nine days, as a rally in the dollar dragged down commodity producers and the European Central Bank said inflation remains a concern. Schlumberger Ltd. slumped 2.5 percent as oil traded near the lowest in more than five weeks and Japan intervened in foreign-exchange markets to weaken its currency. Dendreon Corp. tumbled 65 percent as the drugmaker withdrew its sales estimates for 2011 and said it will cut its workforce. Kraft Foods Inc., the second-biggest food company, rallied 5.3 percent after saying it plans to spin off its North American grocery business to shareholders, splitting the company in two. The S&P 500 dropped 1.4 percent to 1,242.34 at 9:34 a.m. in New York. The Dow Jones Industrial Average lost 138.35 points, or 1.2 percent, to 11,758.09. “The mood right now is gloomy,” Mike Ryan, the New York- based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $774 billion. “The burden of proof is for better data that show the economy is not falling into recession. Then, we have Trichet saying that while everyone is focusing on stagnation, he still keeps his eye on inflation. Tomorrow’s payroll report is crucial. If we see another disappointment, the stock market will have significant downside from here.” ECB President Jean-Claude Trichet, acknowledging a “particularly high” level of uncertainty, said inflation expectations “must remain firmly anchored.” He said the ECB will offer banks additional cash as the region’s debt crisis spreads, increasing pressure on policy makers to resume bond purchases. Stimulus Speculation The S&P 500 slumped 7.6 percent from this year’s high on April 29 through yesterday amid concern about Europe’s debt crisis and speculation that U.S. lawmakers would fail to reach a compromise to boost the nation’s ability to borrow by a deadline set Aug. 2. Stocks rose yesterday, preventing the longest Dow slump since 1978, amid speculation the Federal Reserve may consider another economic stimulus program to avert a recession. Stocks maintained losses after the Labor Department said applications for jobless benefits decreased 1,000 in the week ended July 30 to 400,000, the fewest in almost four months. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The four-week average also declined to the lowest level since April. survey of economists. The report last week showed jobless claims fell by 24,000 to 398,000, the lowest level since April. The government’s monthly payrolls report tomorrow may show employers added 85,000 jobs in July, according to forecasts compiled by Bloomberg. Energy Stocks Energy shares slumped as oil tumbled on concern the economic recovery is faltering in the U.S., the biggest crude consumer. Schlumberger, the world’s largest oilfield-services provider, declined 2.5 percent to $85.04. Exxon Mobil Corp. decreased 1.5 percent to $76.58. Dendreon plunged 65 percent to $12.61. The maker of the prostate-cancer drug Provenge withdrew its 2011 revenue estimate and said sales of the medicine didn’t meet projections. Chief Executive Officer Mitchell Gold said in a statement yesterday that the company was still educating doctors about the $93,000 treatment and a decision last month by the U.S. Medicare and Medicaid program to pay for the drug. Kraft Foods rallied 5.3 percent to $36.13. The grocery entity would consist of the U.S. beverages, cheese, convenient meals and grocery segments “and the non-snack categories in Canada and Food Service,” the Northfield, Illinois-based company said in a statement today. The grocery business will have revenue of about $16 billion, while the global snacks company will garner about $32 billion, Kraft said. General Motors Co. fell 1.4 percent to $26.78. The largest U.S. automaker said second-quarter profit almost doubled on rising U.S. sales. It reported earnings of $1.54 a share, beating the average estimate of 13 analysts surveyed by Bloomberg of $1.20 a share. --Editors: Jeff Sutherland, Michael P. Regan To contact the reporter on this story: 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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