Stocks in America retreated as retailers fell on record oil prices and Yahoo! Inc. tumbled the most in almost two years after Microsoft Corp. abandoned its $50 billion bid for the company.

Macy’s Inc. led chain stores to their biggest decline in five weeks after crude jumped above $120 a barrel. Yahoo, the most-visited Web site, slid 15% as analysts advised selling the shares. Lower-than-forecast earnings at Warren Buffett’s Berkshire Hathaway Inc. sent 22 of 24 insurance companies in the Standard & Poor’s 500 Index lower.

The S&P 500 dropped for the first time in three days, losing 6.41 points, or 0.5%, to 1,407.49. The Dow Jones Industrial Average decreased 88.66, or 0.7%, to 12,969.54. The Nasdaq Composite Index slipped 12.87, or 0.5%, to 2,464.12. Four stocks retreated for every three that rose on the New York Stock Exchange.

“The fact that energy prices are moving higher as well as the news that Microsoft, at least for now, has pulled out of its bid for Yahoo, both of those are casting a pall over things,” the chief market strategist at RiverSource Investments LLC, David Joy, said in an interview on Bloomberg Radio. “Since we were up so strongly in the last few weeks, it’s understandable that we’d pull back.”

The S&P 500 has rallied about 11% from a 19-month low in March as profits topped analysts’ estimates at 69% of the 365 companies in the index that reported first-quarter results, according to data compiled by Bloomberg. The advance pushed the S&P 500’s price-to-earnings ratio to 22.7 last week, the highest in four years.

Some investors distrust that the rally will continue. Options traders are paying 63% more to protect against a drop in the S&P 500 than to bet on a gain during the next three months, the widest difference since at least 2005, according to Bloomberg data compiled last week.

About 1.11 billion shares changed hands on the NYSE, the lowest this year and 26% less than the three-month daily average, according to Bloomberg data.

Stocks briefly pared losses and oil gained after the Institute for Supply Management said service industries in America unexpectedly expanded in April, helping the economy weather a credit contraction and manufacturing slump.

Yahoo, the Web company that spent three months fighting a takeover by Microsoft, tumbled $4.30 to $24.37. The world’s largest software maker said this weekend it walked away when Yahoo demanded $37 a share. Microsoft had increased its original $44.6 billion bid by about $5 billion to $33 a share. Yahoo shares were cut to “sell” at Citigroup Inc. and other firms.

Microsoft slipped 16 cents to $29.08. Google Inc., owner of the most-used Internet search engine, climbed $13.61 to $594.90.