Rita Nazareth
Bloomberg News

NEW YORK: Stocks declined Thursday, trimming the third straight monthly advance for the benchmark Standard & Poor’s 500 index, amid concern about a worsening of Europe’s debt crisis and a further slowdown of the global economy.

Sears Holdings Corp. slumped 7.9 percent as the retailer will be replaced in the S&P 500 by chemical maker LyondellBasell Industries NV.

Ciena Corp., a maker of communications-network equipment, tumbled 20 percent after reporting a wider-than-projected loss and forecasting lower revenue than analysts had estimated.

Gap Inc. rose 2.7 percent as sales beat estimates.

The S&P 500 declined 0.8 percent to 1,399.48, trimming its monthly advance to 1.5 percent.

The Dow Jones industrial average retreated 106.77 points, or 0.8 percent, to 13,000.71. Volume for exchange-listed stocks in the U.S. was 4.5 billion shares, near the lowest level since at least 2008, excluding days surrounding holidays.

“The main focus is the softer news overseas,” said Michael Strauss, who helps oversee about $26 billion of assets as the chief investment strategist at Commonfund in Wilton, Conn. “There’s more of a reality check of Europe. Clearly the numbers in the U.S. have gotten a bit better.”

Equities slumped as data showed that economic confidence in the euro area and Japan’s retail sales fell more than economists forecast, while South Korean manufacturers’ confidence stayed near the lowest level since the global financial crisis. Spain will delay deciding whether to seek a sovereign bailout until the aid conditions are clear, Prime Minister Mariano Rajoy said following a meeting with French President Francois Hollande.

In the United States, more Americans than forecast filed applications for unemployment benefits last week, a sign that progress in the labor market is faltering amid a slowing economy. Consumer spending climbed in July for the first time in three months as the biggest part of the economy struggled to overcome a jobless rate hovering over 8 percent.

Federal Reserve Chairman Ben S. Bernanke is scheduled to speak today in Jackson Hole, Wyo., where he could discuss the economic outlook. Policy makers have said they are prepared to provide new stimulus “fairly soon” unless there is evidence of “substantial and sustainable” improvement in the recovery, according to minutes of the Federal Open Market Committee’s July 31-Aug. 1 meeting. Policy makers are set to meet in September.

Sears fell 7.9 percent to $52.90. S&P said the company has too few shares available for trading to be representative of U.S. companies. The retailer has 106.5 million shares outstanding and 36.1 million shares that can be traded, based on data compiled by Bloomberg.

It is controlled by hedge-fund manager Edward Lampert. He and his RBS Partners LP hedge fund own a total of 61.7 percent, while Fairholme Capital Management has 15.8 percent, data compiled by Bloomberg show.

Ciena tumbled 20 percent to $13.46. The economy is taking a toll, and Ciena has been slow to book revenue on new products, Chief Executive Officer Gary Smith said. Ciena’s biggest customers are phone carriers such as AT&T Inc.