Aug. 19 (Bloomberg) -- U.S. stocks headed for their first drop in five days amid renewed concern that surging oil prices will hurt consumer spending and corporate profits. Shares of retailers such as Gap Inc. and Limited Brands fell.

``When you see oil pop like this, it has a direct impact on both inflation and corporate profits,'' said Scott Wren, senior equity strategist at A.G. Edwards & Sons Inc. in St. Louis. Those factors ``drive stock prices over the long haul.''

Investors were also disappointed by an index of leading U.S. economic indicators, which fell in July, and by a report that showed Philadelphia-area manufacturing expanded at a slower pace this month, signaling that record energy prices are keeping growth from accelerating.

Google Inc., which runs the world's most-used Internet search engine, soared as much as 22 percent after shares began trading on the Nasdaq Stock Market.

The Standard & Poor's 500 Index lost 7.48, or 0.7 percent, to 1087.97 as of 2:50 p.m. in New York. The Dow Jones Industrial Average shed 76.76, or 0.8 percent, to 10,006.39 and the Nasdaq Composite Index dropped 16.36, or 0.9 percent, to 1815.01.

About seven stocks fell for every five that rose on the New York Stock Exchange. Some 918.3 million shares changed hands on the Big Board, 11 percent less than the same time a week ago.

The S&P 500 has lost 4.7 percent this quarter amid a 31 percent surge in the price of oil.

Crude climbed as much as 3.1 percent to a record $48.75 a barrel on the New York Mercantile Exchange. The increase reflects concern Iraqi exports will fall further because of clashes in southern Iraq. Separately, a mortar attack in Baghdad wounded an American soldier and militants lit offices of an Iraqi oil company on fire, according to the Associated Press.

Gap Falls

Gap, the biggest U.S. clothing chain, lost 59 cents to $20.27. The company is expected to report after exchanges close that second-quarter profit fell to 21 cents a share from 22 cents a year earlier.

Limited Brands dropped 30 cents to $19.95. The No. 2 U.S. clothing retailer said August sales at stores open at least a year are below the company's forecast of ``low single digit'' growth from the same period a year ago.

Profit growth at S&P 500 companies will slow to 14.9 percent in the third quarter and 15.5 percent in the fourth from 25.3 percent in the second quarter, according to Thomson Financial.

Google rose $15.96, or 19 percent, to $100.96. The company and its investors yesterday sold 19.6 million shares for $1.67 billion in the biggest auction-style IPO. Its stock offering was cut in half and the price reduced to $85 a share from a forecast of as much as $135.

Economic Reports

Benchmark indexes extended their losses after the Conference Board's gauge of leading U.S. economic indicators decreased 0.3 percent, the biggest drop since February 2003. Economists had forecast a 0.1 percent decline, according to a Bloomberg News survey.

The number of Americans filing first-time claims for unemployment insurance unexpectedly fell for a third week to 331,000 from a revised 334,000 the week before, the Labor Department said. It was the lowest level since the week ended July 3. Claims were expected to increase to 335,000, according to economists in a Bloomberg survey.

A survey by the Philadelphia branch of the Federal Reserve showed its index of manufacturing activity declined more than expected to 28.5 in August from 36.1 the previous month. A reading of 30 was expected, according to the median estimate of 52 economists in a Bloomberg survey.

No Google Boost

Computer-related shares failed to get a boost from Google, as some investors say prices remain too high after last year's 50 percent jump in the Nasdaq. The index, which gets 39 percent of its value from technology stocks, sells for 46 times earnings, compared with a price-to-earnings ratio of 19 for the S&P 500.

``People have lost their appetite to own technology stocks,'' said James Thorne, who manages $375 million at M&T Bank Corp. ``Money managers are sitting on hordes of cash. I just don't see the confidence in the market right now,'' he said from his office in Baltimore.

Synopsys Inc., which makes software to design computer chips, sank $6.77, or 32 percent, to $14.51. The company said it expects fiscal 2004 earnings, excluding some items, of $1.01 to $1.05 a share. That's lower than its previous forecast of as much as $1.47 a share. Profit will also fall through 2005.

Mylan Laboratories Inc. climbed $1.48 to $17.06. Its 9.5 percent gain was the biggest in the S&P 500. The largest U.S. maker of generic drugs said the U.S. Federal Trade Commission gave billionaire financier Carl Icahn permission to buy as much as 12 percent of the company's shares.

CACI Rises

CACI International Inc. jumped $4.75, or 12 percent, to $45.67. The supplier of interrogators to the U.S. Army said fourth-quarter earnings surged to 69 cents a year from 45 cents, topping the company's previous forecast of as much as 60 cents.

Newmont Mining Corp., the world's biggest gold producer, gained $1.63 to $43.90. Gold prices rose to a four-month high of $410.40 an ounce on the Comex division of the New York Mercantile Exchange, as a decline in the dollar made the dollar-priced metal cheaper for buyers holding euros.

Freeport-McMoran Copper & Gold Inc., the majority owner of the world's biggest gold mine, climbed $1.20 to $35.70, as 11 of 12 members of the Philadelphia Stock Exchange Gold and Silver Index advanced.

Petsmart Inc. lost $1.62 to $28.20. The largest U.S. pet- supplies retailer reported second-quarter sales of $806 million, trailing the $815.1 million average analyst estimate in a Thomson survey.

Navistar International Corp. shed $2.62, or 7.3 percent, to $33.06, for the second-steepest decline in the S&P 500. The truckmaker's fiscal third-quarter profit, excluding a Medicare subsidy and the reversal of some restructuring costs, was 62 cents a share. On that basis, the company was expected to earn 68 cents a share, the average estimate in a Thomson survey.

To contact the reporter on this story: Ari Levy in New York at alevy5@bloomberg.net.

Last Updated: August 19, 2004 14:53 EDT