U.S. stocks fell, after the Standard & Poor's 500 Index rallied to its highest level since 2007, as concern grew over Europe's debt crisis and manufacturing in the New York area shrank more than forecast. The S&P 500 (SPXL1) slid 0.2 percent to 1,463.27 at 9:31 a.m. in New York. The benchmark equities gauge last week rallied to the highest level since December 2007 as the Federal Reserve's plan to buy mortgage securities fueled demand for riskier assets. “It looks like we need to take a smaller breather after the sizable rally that we've had," Randy Frederick, managing director of active trading and derivatives at Charles Schwab Corp., said in an interview from Austin, Texas. His firm has $1.83 trillion in client assets. “There's the potential for a small pull-back, but I think we will move back into the bull territory later in the week unless there's an unexpected negative news event." Commodity, financial and industrial shares had the biggest gains among 10 groups in the S&P 500 last week, helping to extend the gauge's two-week advance to 4.2 percent. The index is 6.8 percent away from its all-time high set in October 2007. Stocks fell as European Union finance ministers failed to agree on a timetable for a more unified banking sector and clashed over terms of bailout requests and the role of the European Central Bank at a meeting Sept. 14 in Cyprus. Citigroup Inc. became the latest bank to cut its growth forecast for China. At least 13 banks and brokerages have reduced their 2012 economic growth forecasts for the world's second-largest economy this month. U.S. equity futures also declined as the Federal Reserve Bank of New York's general economic index dropped to minus 10.41, the lowest since April 2009, from minus 5.85 in August. The median forecast of 53 economists in a Bloomberg survey called for minus 2. Readings less than zero signal contraction in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut. Bloomberg
