* Fitch downgrades Spain's credit rating by one notch
* Consumer spending wilts, unexpectedly flat in April
* Apple higher on foreign iPad launch, broker comments
* Indexes off: Dow 1.4 pct; S&P 1.5 pct; Nasdaq 1.3 pct
* For up-to-the-minute market news see []
(Updates to late afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, May 28 (Reuters) - U.S. stocks fell 1 percent on
Friday, extending earlier losses as a downgrade by Fitch
Ratings of Spain's credit rating reignited worries about
euro-zone debt issues.
Fitch cut Spain's credit rating by one notch, saying the
country's economic recovery will be more muted than the
government forecast due to its austerity measures. For details,
see []
U.S.-listed shares of Spain's Banco Santander SA
<SAN.MC><STD.N> fell 2.5 percent to $10.17.
"It definitely spooked the market, no doubt about it," said
Terry Morris, senior equity manager for National Penn Investors
Trust Company in Reading, Pennsylvania.
"Up until now it's been mostly Greece and the threat of
Spain and Portugal and Ireland. With Fitch actually downgrading
Spain, it seems as if it is no longer a hypothetical, the
contagion is now real."
The Dow Jones industrial average <> dropped 141.25
points, or 1.38 percent, to 10,117.74. The Standard & Poor's
500 Index <.SPX> fell 16.17 points, or 1.47 percent, to
1,086.89. The Nasdaq Composite Index <> lost 30.63 points,
or 1.34 percent, to 2,247.05.
The downgrade pushed Wall St further into the red, as
stocks had fallen earlier after data showed consumer spending
was unexpectedly flat last month and growth of U.S. Midwest
business activity slowed more than expected.
Data from the Commerce Department showed April was the
first month since September that consumer spending did not
increase, but the largest gain in real disposable income in
nearly a year gave hope that spending will resume in coming
months.
A separate report showed business activity in the Midwest
grew less than expected in May after scaling a five-year high
in April. An employment gauge in the Institute for Supply
Management-Chicago's survey slipped. []
Investors also took advantage of the opportunity to book
gains heading into a long holiday weekend and after Wall
Street's rally in the previous session. May is on track to be
the worst month for stocks since February 2009 after hitting an
18-month high in late April as investors fretted over a debt
crisis in Europe and its implications for global growth.
U.S. markets will be closed on Monday for the Memorial Day
holiday.
Energy shares ranked among the biggest losers on Friday, a
day after the S&P energy index <.GSPE> racked up its largest
gain in 14 months. The S&P energy index was down 2.4 percent.
Halliburton <HAL.N> tumbled 8.1 percent to $24.80 and
Schlumberger <SLB.N> fell 6.5 percent to $55.93.
The U.S.-listed shares of BP Plc <BP.L><BP.N> shed 5.7
percent to $42.79 after the company's chief executive officer
said some progress had been made in its bid to plug the leaking
Gulf of Mexico oil well, though it could still take 48 hours to
conclude whether it has been fully successful. []
Apple Inc <AAPL.O> was among the few bright spots, rising
0.5 percent at $254.75 after the iPad tablet computer debuted
outside the United States and Bank of America-Merrill Lynch
raised its price target on the stock by $25 to $325.
[] and []
The Thomson Reuters/University of Michigan Surveys of
Consumers showed consumer sentiment rose a bit in May from
April but was roughly unchanged from levels since February,
while the one-year inflation expectations index also climbed to
its highest since October 2008.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)
