Most U.S. stocks slip after two-day rally; corn reaches record

July 30 (Bloomberg) -- Most U.S. stocks fell following the biggest two-day rally of the year, while European equities rose for a third day and Spanish bonds rallied on speculation policy makers will take action to ease the region’s debt crisis. Corn jumped to a record as an American drought persisted.

The Standard & Poor’s 500 Index slipped 0.1 percent to 1,385.02 at 1:33 p.m. in New York after jumping 3.6 percent over the previous two sessions, its biggest back-to-back gain since Dec. 1. About four stocks retreated for every three that rose on U.S. exchanges. The Stoxx Europe 600 Index surged 1.6 percent to extend a three-day rally to more than 5 percent. U.S. Treasury notes halted a three-day retreat to send rates down 3.5 basis points to 1.51 percent. The euro depreciated 0.5 percent to $1.2258, snapping a three-day gain. Corn, wheat and soybean futures rallied more than 2 percent.

European Central Bank President Mario Draghi met with U.S. Treasury Secretary Timothy Geithner in Frankfurt today after leaders in Berlin, Paris and Rome backed him by saying they will do what’s needed to protect the 17-nation euro. Spain’s economy shrank 0.4 percent in the second quarter, the National Statistics Institute in Madrid said today. The Federal Reserve will start a two-day meeting tomorrow.

“People looked at their portfolios over the weekend and, after a move like we saw, that usually brings more sellers and people rearranging their positions,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in a telephone interview. His firm oversees $12 billion in assets. “It’s an extremely frustrating market. People that were shorting lost it all in two days, people that were more long came back but nobody is killing it.”

Market Leaders

JPMorgan Chase & Co. lost 2 percent for the biggest decline in the Dow Jones Industrial Average as Deutsche Bank AG cut its recommendation on the stock. Alcoa Inc., Merck & Co. and Caterpillar Inc. also fell more than 1 percent for the biggest declines in the Dow, while United Technologies Corp. and Cisco Systems Inc. climbed at least 1.3 percent for the biggest gains.

The Shaw Group Inc. jumped 53 percent, its biggest gain since going public in 1993, after Chicago Bridge & Iron Co. agreed to buy the company for about $3 billion to expand its portfolio of engineering and construction projects across the energy industry.

Fed policy makers meet this week before a jobs report to decide whether additional stimulus is needed to combat a slowdown in the world’s biggest economy. Labor Department data on Aug. 3 is forecast by economists to show U.S. employers added 100,000 jobs to payrolls in July and the unemployment rate held at 8.2 percent. Other data may show manufacturing stagnated in July and consumer confidence fell for a fifth month.

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