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Markets decline as euro-zone debt concerns heighten for investors

NEW YORK (Reuters) - US stocks fell yesterday on euro-zone debt worries that could spill over into next week’s trading with a bearish note, while retailers lost ground after a weak profit outlook from Gap.The S&P 500 remains hemmed in between technical support at 1,330 and resistance at 1,340, suggesting a lack of direction and keeping the market vulnerable to events such as the uncertain outcome of the euro zone’s debt problems.“It seems like there’s more of a consensus building that there’s some potential risk coming on line here,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management Inc in Bethesda, Maryland, which manages about $14.8 billion.Shares of large multinationals, which tend to rely heavily on overseas sales, fell in sync with the euro’s slide against the dollar. Shares of manufacturer 3M dropped 1.2 percent to $93.56 and weighed on the Dow.The euro lost nearly one percent over disagreements on how to handle debt problems in Greece and ahead of a Spanish regional election.Gap Inc fell 17.5 percent to $19.22 after slashing its full-year profit outlook late on Thursday, saying higher price tags will not be enough to offset rising cotton costs. The S&P Retail index fell 1.4 percent.In the options market, the predominant activity favored more bearish bets than have been seen over the past month.“The economic recovery and macro picture do seem to indicate a more protracted slow economic recovery long term,” Ms Trunow said. “Unless we see a great deal of positive surprises on economic indicators, I think some of these negative events will continue to weigh on the market.”The Dow Jones industrial average was down 93.28 points, or 0.74 percent, to end at 12,512.04. The Standard & Poor’s 500 Index was down 10.33 points, or 0.77 percent, at 1,333.27. The Nasdaq Composite Index was down 19.99 points, or 0.71 percent, to close at 2,803.32.For the week, the Dow was down 0.7 percent, the S&P 500 was down 0.3 percent and the Nasdaq was down 0.9 percent.Ahead of May options expiration at yesterday’s close, traders had exchanged about 669,000 contracts on the S&P 500 Index as puts outpaced calls by a factor of 2.10:1, according to options analytics firm Trade Alert. The ratio’s 22-day moving average is 1.67. Trade Alert data shows.Oil prices jumped but the S&P energy sector index still fell 0.3 percent for the day. Exxon Mobil Corp declined 0.9 percent to $81.57 and Chevron Corp lost 1.3 percent to $102.57, both dragging on the Dow.In the industrial sector, Caterpillar Inc shed 0.9 percent to $104.33, while the S&P Cap Goods sector index lost 1.1 percent.On the upside, Barnes & Noble Inc shares jumped 29.9 percent to $18.33 after John Malone’s Liberty Media Corp proposed buying the company for $1.02 billion. The largest US bookstore chain put itself up for sale nine months ago.About 6.71 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with the average of about 8.4 billion last year.Declining stocks outnumbered advancing ones by almost two to one on both the NYSE and the Nasdaq.