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By — Bloomberg News,

U.S. stocks fell for the third week, including the biggest one-day drop since 2008, as Standard & Poor’s reduction of the nation’s credit rating and Europe’s debt crisis fueled concern the economy will falter.

The S&P 500 pared its slump in the past two days as government data showed jobless claims unexpectedly decreased and retail sales improved. Bank of America plunged 12 percent, the worst-performing stock in the Dow Jones industrial average. The S&P 500 lost 1.7 percent to 1178.81 in the five days ending Aug. 12. The Dow fell 175.59 points, or 1.5 percent, to 11,269.02.

“Investors are going to have to get accustomed to above-normal volatility,” said Leo Grohowski, chief investment officer for BNY Mellon Wealth Management. The firm oversees $171 billion. “Economic uncertainty is going to continue to outweigh the good news from company fundamentals. We’re all hostage to the news flow out of Europe.”

About $6.8 trillion was wiped off the value of global equity markets from July 26 to Aug. 11, as Europe’s debt crisis deepened and investors speculated the economy may contract.

The S&P 500 plunged 6.7 percent Monday, its biggest slump since December 2008, in the first trading session after the United States was stripped of its AAA credit rating at S&P. The index rebounded 4.7 percent Tuesday after the Federal Reserve said it will leave its benchmark interest rate at a record low through at least the middle of 2013. The gauge then fell 4.4 percent Wednesday and rebounded 4.6 percent Thursday.

The Treasury will sell $29 billion in three-month bills and $27 billion in six-month bills Monday. They yielded 0.005 percent and 0.075 percent, respectively, in when-issued trading.

— Bloomberg News

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