US stocks edge down as Spanish bond yields soar

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NEW YORK (AP) — Stock indexes edged lower in early trading Thursday as spiking bond yields in Spain overshadowed the latest signs of growth in the U.S. economy.

An auction of 10-year bonds in Spain left the country paying interest rates of nearly 7 percent. That’s the highest rate since 1997 and a level that economists see as unsustainable. Greece and Ireland had to get bailed out by the European Union after their bond yields jumped above the same level.

The auction came a day after Fitch Ratings warned that major U.S. banks could be “greatly affected” if Europe’s debt crisis continues to spread beyond financially troubled countries such as Greece, Ireland, Portugal, Italy and Spain.

Concerns about Europe’s debt crisis contrasted with better economic reports in the U.S. The number of people seeking unemployment benefits last week fell to the lowest level in 7 months. Applications fell to 388,000, below Wall Street’s estimates of 395,000. That’s a sign layoffs are easing.

Building permits jumped 10.9 percent, much higher than economists expected. That’s another sign that the U.S. may not be headed for another recession.

The Dow Jones industrial average was down 40 points, or 0.2 percent, to 11,865 at 9:45 a.m. Eastern. Hewlett-Packard Co. led the Dow lower with a 2.2 percent drop.

The S&P 500 lost 6, or 0.5 percent, to 1,230. Telecommunications companies were the only one of the 10 industries in the S&P 500 index to post gains.

The Nasdaq composite slid 14, or 0.5 percent, to 2,626.

In corporate news:

— Sears Holdings Corp. fell 6 percent after its third-quarter results missed Wall Street’s expectations. The retailer’s sales were dragged down by declining consumer electronics sales and softer sales at its Kmart stores.

— J.M. Smucker Co. lost 1.2 percent after reporting that rising costs for ingredients were cutting into profits.

— Boeing Co. rose 0.4 percent after the company announced its largest commercial airplane order. Lion Air, a private carrier in Indonesia, ordered a total of 230 airplanes at a list price of $21.7 billion.