July 13 (Bloomberg) -- U.S. stocks slumped for a second day as record oil prices and Israel's strike against Lebanon shook the confidence of investors already hurt by second-quarter earnings that failed to meet estimates.

``We're having a complete breakdown in attitude toward the stock market,'' said Thomas McIntyre, who manages $120 million at McIntyre, Freedman & Flynn in Orleans, Massachusetts. ``In a declining market, everything that's wrong in the world seems more important.''

Wal-Mart Stores Inc., the world's biggest retailer, dropped after Merrill Lynch & Co. cut its rating on the shares, saying high energy prices are reducing consumer spending. Nucor Corp., a steelmaker, and Dow Chemical Co., whose costs are influenced by oil prices, led the decline as crude topped $76 a barrel.

The Standard & Poor's 500 Index slid 7.49, or 0.6 percent, to 1251.11 at 1:15 p.m. in New York, cutting its gain for the year to 0.2 percent. The Dow Jones Industrial Average fell 102.29, or 0.9 percent, to 10,910.89. The Nasdaq Composite Index lost 14.75, or 0.7 percent, to 2075.49.

Concern that turmoil in the Middle East may broaden, along with North Korea's refusal to resume negotiations over its nuclear program, also weighed on stocks in Europe and Asia. Morgan Stanley Capital International's Europe, Australasia, Far East Index, or EAFE, dropped 1.1 percent.

Israel's Tel Aviv 25 Index plunged 4.3 percent after Israel bombed Beirut's airport a day after Hezbollah captured two soldiers. At least 56 people have been killed in the conflict, Israel's first incursion into Lebanon since withdrawing in 2000.

Lebanon fired rockets into Haifa, Israel's third-largest city, CNN said, citing Israeli's military.

Gold Rises

The attack prompted investors to seek havens. Gold added as much as 0.8 percent to $656.50 an ounce in New York.

The S&P 500 has lost 1.5 percent this month as companies including Alcoa Inc. and Lucent Technologies Inc. fueled concern second-quarter profit will trail analysts' estimates. Technology shares have been this year's worst performers. The Nasdaq, which gets 41 percent of its value from computer-related shares, has slumped 4.4 percent in July.

Crude oil for August delivery gained as much as 2.1 percent to a record $76.55 a barrel in New York after Israel's strike and the threat of violence in Nigeria increased concern supplies may be disrupted.

Bad Signals

``Any time you get a new high in oil it's not a good signal for the market,'' said Christopher Orndorff, who oversees $50 billion as the head of equity strategy at Payden & Rygel in Los Angeles. ``Any time you have something that takes money out of consumers' pockets, that's a net loss for our economy.''

Wal-Mart declined 98 cents, or 2.2 percent, to $44.17 for the Dow's second-biggest loss. Merrill reduced the shares to ``neutral'' from ``buy,'' saying slowing sales may reduce the retailer's profit.

A gauge of raw-materials companies, including Nucor and Dow Chemical, had the biggest decline among 10 industry groups in the S&P 500, losing 1.7 percent.

Nucor lost $2.21, or 4.1 percent, to $52 for the S&P 500's No. 3 drop. Dow Chemical slipped 62 cents to $37.01.

About nine stocks fell for every two that rose on the New York Stock Exchange. More than 948 million shares changed hands on the Big Board, about 24 percent more than the same period two weeks ago.

Dell's Pricing

Dell Inc. lost 13 cents to $22.25. The world's biggest personal-computer maker said it will reduce the number of rebates it offers and change pricing as part of its effort to win back customers from Hewlett-Packard Co.

Intel Corp. gained 5 cents to $17.92. The No. 1 computer- chip maker will eliminate 1,000 management jobs worldwide, according to spokesman Chuck Mulloy.

American shares of SAP AG, the world's largest maker of business-management software, tumbled $3.52 to $46.82 after its second-quarter sales from software licenses rose less than analysts anticipated. Oracle Corp., SAP's biggest competitor, fell 4 cents to $14.18.

Cree Inc. dropped $4.98 to $17.61. The maker of semiconductors that light dashboards and cellular phones said fourth-quarter earnings missed its forecast because of production problems and higher taxes.

Walt Disney Co. lost $1.06, or 3.5 percent, to $28.85 for the Dow average's biggest drop. Shares of the No. 2 U.S. media company were cut by CIBC World Markets Inc. analyst Jason Helfstein, who cited slower growth in fiscal 2007 because of lower theme-park attendance and fewer television shows in syndication.

Cowen Offering

Cowen Group Inc. fell 12 cents to $15.88 in the first day of trading following its initial public offering. The investment-banking unit of Societe Generale SA failed to raise as much as it sought in the IPO.

AmerUs Group Co. gained 36 cents to $66.86. Aviva, Britain's largest insurer, agreed to buy the seller of life insurance and annuities for $2.9 billion, or $69 a share. That's 10 percent more than AmerUs's closing price of July 6, the day before Aviva said it was considering a bid.

The lone economic report today showed the number of U.S. workers filing first-time applications for state jobless benefits rose last week by 19,000 to 332,000. Economists expected the Labor Department report to show a climb to 320,000, according to the median estimate in a Bloomberg News survey.

To contact the reporter on this story:
Nick Baker in New York at  nbaker7@bloomberg.net.

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