U.S. stocks (SPX) fell, driving the Standard & Poor’s 500 Index to this month’s first weekly loss, as European leaders struggled to solve the region’s debt crisis and the Federal Reserve refrained from additional stimulus.

Equities rose the last two days of the week as data on jobless claims and manufacturing offset concern Europe’s crisis is escalating. Energy producers dropped 4.9 percent in the week, the most among 10 groups (SPXL1) in the S&P 500. Caterpillar Inc. (CAT) and Alcoa Inc. (AA) slumped at least 8.6 percent. Intel Corp. slid 7.1 percent, pacing declines among technology companies. Research In Motion Ltd. (RIM) tumbled 18 percent after delaying the next generation BlackBerry, which is designed to fuel a comeback.

The S&P 500 fell 2.8 percent to 1,219.66, breaking a two- week streak of gains. The Dow Jones Industrial Average sank 317.87 points, or 2.6 percent, to 11,866.39 for the week.

“The market continues to be driven by headline stories about Europe, although the economic news has been more positive with respect to the U.S.,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. “On alternate days, people are either paying attention to those improving fundamentals or worrying about what’s going on in Europe.”

Stocks slumped on Dec. 12 as Moody’s Investors Service said a European Union summit failed to produce “decisive policy measures” and Fitch Ratings said a comprehensive solution has not yet been offered. The S&P 500 extended its decline the next day following the Fed’s decision.

Jobless Claims

The S&P 500 rebounded from a three-day slump on Dec. 15 after Labor Department figures showed initial jobless claims fell by 19,000 to 366,000 in the week ended Dec. 10, the fewest since May 2008, and two reports showed manufacturing in the New York and Philadelphia regions expanded more than forecast in December.

The index has failed to maintain gains, falling 3 percent since the end of 2010 after being up for the year on nine days since Oct. 27. It fell within 1 percent of a bear market, or a 20 percent plunge, from its high on April 29 with its slump through Oct. 3. The measure has rebounded 11 percent since then.

“I’m pretty cautious to be honest with you,” Adam Parker, the New York-based U.S. equity strategist at Morgan Stanley, said in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “The risk-reward is still skewed toward the negative for the market over the medium-term.”

Energy producers posted the biggest declines for the week as a group, falling 4.9 percent as oil posted the biggest weekly loss since September. Chevron Corp. (CVX), the second-largest U.S. oil producer, fell 3.3 percent to $100.86. Transocean Ltd. (RIG) retreated 7.9 percent to $39.83.

Brazilian Prosecutor

Chevron and Transocean should halt operations in Brazil and pay 20 billion reais ($10.7 billion) in damages after an oil spill last month, prosecutors urged a federal court.

Alpha Natural Resources Inc. (ANR), a coal company, slid 16 percent to $19.62.

The Morgan Stanley Cyclical Index of companies most-tied to economic growth slipped 4.9 percent. So-called defensive industries, which some investors consider safer during an economic slowdown, posted the smallest losses in the S&P 500. Utilities slumped 0.2 percent, telephone companies retreated 0.3 percent, health-care companies slipped 0.4 percent and consumer- staples stocks dropped 0.5 percent.

Caterpillar, the world’s largest construction and mining- equipment maker, tumbled 9.1 percent to $87.20. Alcoa, the largest U.S. aluminum producer, sank 8.6 percent to $8.81.

Supply Shortages

Intel tumbled 7.1 percent to $23.23 this week, pacing declines with technology companies which had the second-biggest decline as a group in the S&P 500. The world’s largest maker of semiconductors cut its forecast for fourth-quarter revenue (INTC), saying supply shortages for hard drives are prompting computer producers to cut orders for other components.

Research In Motion fell 18 percent to $13.44, the lowest level in almost eight years, after saying a new generation of BlackBerrys designed to fuel a comeback won’t be out until the “latter part” of 2012.

Zynga Inc. fell 5 percent to $9.50 on its first day of trading after raising $1 billion in an initial public offering. The largest maker of games for Facebook Inc.’s website sold 100 million shares for $10 each, the top of a proposed range.

First Solar Inc., the world’s largest maker of thin-film solar panels, had the biggest decline in the S&P 500, falling 30 percent to $31.91. The company reduced profit estimates (FSLR) for this year and next and said it will cut about 100 jobs as it closes a California research center.

Best Buy Co., the largest consumer-electronics retailer, slumped 18 percent to $23.19. Its profit declined more than analysts estimated, hurt by Black Friday discounts.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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