American stocks fell the most in seven days after the first signs of quarterly earnings disappointed investors, Washington Mutual Inc. slashed its dividend, and some Federal Reserve officials warned of a prolonged recession.

Washington Mutual led financial shares to their biggest drop this month after the largest savings and loan cut its payout by 93% following a $1.1 billion loss. Lennar Corp. led declines in all 15 homebuilders in Standard & Poor’s indexes after pending home sales fell more than forecast. Advanced Micro Devices Inc. retreated the most in three weeks on a 22% slump in first-quarter sales.

“We’ll be lucky to see earnings be flat for the year and we’ll probably see earnings decline,” a manager of about $6 billion as head of global investment strategy at Legg Mason Asset Management in New York, Steven Bleiberg, said in an interview with Bloomberg Television. “Ultimately you’ve got to have earnings growth, that’s the driver, and I just don’t see it happening. There are so many negative signs out there.”

First-quarter earnings at S&P 500 companies probably fell by an average 11.3% from a year earlier, according to analyst estimates compiled by Bloomberg.